With the Bureau of Energy Efficiency’s (BEE) revised standards, now in effect as of January 1, 2023, refrigerators and ceiling fans will get costlier by up to 12 per cent, or even up to 20 per cent for 5-star rated products. “With BEE certification in force, we expect that the entry level fans which account for 60 per cent of the ceiling fan sales across organized industry will see around 10-12 per cent price increase. However, we do not see this as a hurdle in consumer demand as we are confident that the shoppers will continue to opt for technology that meets all expectation, even if it comes at a slightly more priced,” said Sashi Prabhu, Vice President and BU Head, Indoor Air Quality Business, Panasonic Life Solutions India. Ceiling fans have come under the ambit of the mandatory star labeling regulations in the country for the first time.
Per the revised BEE norms, there will be tightening of energy efficiency further “to meet global standards and efficiencies in terms of units consumption”. Another change requires declaration of the net capacity of a refrigerator unit as the total capacity in litres (similar to storage space), instead of mentioning both gross and net capacity, explained Anup Bhargava, Product Group Head-Refrigerators, Godrej Appliances. He further stated that with the cost inputs going up to achieve those efficiencies through product design changes, better insulation, etc, prices of products could go up by 2-3 per cent,depending on various models and star ratings.
Meanwhile, Rakesh Khanna, MD and CEO, Orient Electric Ltd said that even as the brand is trying to contain the price increase, the new norms will lead to a hike of 7-8 per cent across the product range. Usha International is looking at price increases in the range of 5-7 per cent for 1-star fans and up to 20 per cent for 5-star rated fans.
Will the new norm affect demand?
While the brands will try to absorb maximum costs, the price increase will affect entry-level buyers as affordability costs will rise. “While there could be a minor dip, or rather delay in demand picking up, fans are an essential and once consumers understand that in the long run this price differential works to their advantage, and at the same time lower their carbon footprint, demand will be on track,” said Dinesh Chhabra, CEO, Usha International.
Others reiterated that the demand will pick up with consumers getting more aware about energy saving features, leading to long-term cost saving. “In our opinion, consumers would be glad since they are aware about the positive impact of an efficient fan, leading to longer-term cost savings. Rural electrification in the country has created new opportunities for the fan sector, leading to growing market size for the players. The industry has witnessed a good growth trajectory in the past two years, and we are optimistic that it will continue with the same pace,” said Saurabh Goel, President, Havells India.
Meanwhile, Panasonic’s Sashi Prabhu said, “We foresee a greater single-digit year-on-year quantity rise this year as we implement our channel strategy to sell star rated fans.” He added that the entry level fans will see “around 10-12 per cent demand increase” with no hurdle in consumer demand even if it comes at a slightly more price.
When will the new star-rated inventory be available at retail outlets?
While many brands have already started manufacturing and supplying the new star-rated inventory, others are looking at replenishing the already existing products before the new inventory reaches all the outlets. Rakesh Khanna said, “At this point of time, trade could still have non-star rated fans in stock, which they can continue to sell to the customers. However, it’s just a matter of time that this stock is completely replenished with the star-rated fans. By the time consumer awareness kicks in, we think most of the retailers would be stocked up 100 per cent on star rated fans.”
Meanwhile, many others had already started placements of star-rated products and their old inventory has been liquidated by now. “We are sold out at the primary level for all our non-star rated models. We have strategically placed our products at both primary and secondary distribution channels which has helped us liquidate all our stocks thus absorbing most of the impact,” said Sashi Prabhu. Panasonic had commenced its single star rated fan placement in the markets from late September 2022. “In December, we had the entire portfolio of star rated fans in our central distribution centers and at our captive manufacturing facility at Dhamdachi in Gujarat,” he added.