Consumer electronics major Canon India is increasing prices of its products to offset the impact of rupee depreciation and will miss its target of clocking 25 per cent growth to touch Rs. 2,350 crore sales turnover this year due to demand slowdown.
While the company has already raised prices of its DSLR cameras last week, it will undertake another round of 5 per cent price hike of both its consumer and B2B product categories in October.
“There is a huge pressure on our margins due to the rupee depreciation. While we have absorbed some parts, at the current rate we need to pass some of the burden to consumers. We have already hiked the price of our DSLR cameras by 6 per cent from August 30,” Canon India Senior Vice-President Alok Bharadwaj told PTI.
The rupee has depreciated 20 per cent in the last three months and 25 per cent from last year, he added.
Canon’s DSLR cameras are available at a price of around Rs. 29,000 to Rs. 4.55 lakh in India.
The price hike in October will be across both consumer and B2B, including copiers and IT peripherals.
“In July, we had increased prices of B2B items by 5 per cent but the consumer category was not touched, but this time we will have to increase as we have no option,” Mr. Bharadwaj said.
Companies are facing the double impact of slowdown in overall economic growth, which has affected demand badly, and rupee depreciation, he added.
“There is not much of investment and expansion happening in the B2B segment. On the consumer side, people are also not spending much,” he said.
When asked if this would affect the company’s growth forecast, Mr. Bharadwaj said: “This year we will have a flat growth and our sales will be the same as last year at Rs 1,850 crore. We cannot achieve the 25 per cent growth we had envisaged in the beginning of this year. Even the forecast for next year is not very bright from a macro-economic point.”
In January this year, the company had said it expected to clock 25 per cent growth, taking its revenues to Rs. 2,350 crore by the end of 2013. It had also set a target of becoming a $1 billion entity by 2016.
Canon India, however, is pinning hopes on the DSLR camera segment which has been growing fast in India.
“The Indian DSLR camera market is expected to be 2.5 lakh units this year or around Rs. 2,000 crore in value. We have about 45 per cent market share. Next year, we expect our share to be 50 per cent when the market touches 3 lakh units,” Mr. Bharadwaj said.
In order to achieve it, he said the company will be increasing its retail network and Canon Image Square stores (CIS) to 110 by the end of this year.
“At present, we are in 56 cities and towns, and we expect it to increase to 100 and add another 100 CIS in the next two years,” Mr. Bharadwaj added.