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business | IST

Blue Star bets on upcoming festive season after Onam sales disappoint

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B Thiagarajan, managing director of Blue Star, assessed the demand amid a harsh summer in the north and also with the festive season around.

Nirmal Bang has written an interesting note on consumer durables stating that business sentiment has still not improved meaningfully across product categories and pent-up demand is not as strong this year, as it was last year. So, the fear of a possible third COVID-19 wave among channel partners has led to low stocking. B Thiagarajan, managing director of Blue Star, assessed the demand amid a harsh summer in the north and also with the festive season around.
“I am not able to relate to this particular report. I can only talk about air-conditioners. As far as room air-conditioners are concerned, the demand has been robust as of now. Despite the price increases that have been implemented in April, again, we will be increasing the prices,” he said.
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The company is planning to increase the prices by another 3 percent from September. “In January, we increased the prices between 5 percent and 8 percent. In April, between 3 percent and 5 percent depending on the models and from September, we are planning to increase it by another 3 percent,” he added.
It's important to note that the FMCG sector relies on the September-October festive season for a boost in sales.
On festive-related sales, he mentioned, “In Kerala, the pandemic is on. So normally Onam sets the tone for the rest of the festival season but due to COVID-19, Onam sales were not that great. Q1FY22 sales were around 50-55 percent of Q1FY20 and in Q2FY22, we expect to be close to around 90 percent of Q2FY20 levels.”
On margins, he said that despite price hikes, the company has not able to mitigate margin pressure fully. He also mentioned that the company is facing cost pressure due to raw material and container shortage.
People are upgrading their homes and 50 percent of the customers are going in for consumer finance and that market is holding up well, he shared.
For the full interview, watch the accompanying video.