Retailers like Future Group, Lifestyle, Godrej, MegaMart, Fabindia offering 0% EMI to attract customers

KOLKATA/NEW DELHI: Retailers are countering the economic slowdown by offering interest-free equated monthly instalment (EMI) schemes, which they say are not only helping them pull customers into stores but also encouraging shoppers to buy higher value products. Such EMI-based sales promotions have staged a big comeback at a time near double-digit inflation has put a heavy strain on household budgets, making people defer non-urgent and big-ticket purchases even on credit because of hardening interest rates. But transactions carrying zero percent financing have grown more than 50% over the past year, say retailers and bankers. From apparel sellers such as Arvind Brand's MegaMart and Fabindia to multi-product retailers such as Future Group, Lifestyle and Godrej, firms reckon that zero-interest EMI options are the most effective discounts they can offer. While retailers end up bearing the interest for the duration of the credit extended, they see it as an acceptable cost of keeping the sales register ticking during the downturn. "EMI schemes are removing inhibitions and inducing consumers to splurge on big-ticket items," says Himanshu Chakrawarti, chief executive of Essar Group's Mobile Store, the country's largest mobile phone retailer. He says consumers going for six-month EMIs are buying handsets priced twice than they had initially planned and those going for nine-month to 12-month schemes are tripling their size of transaction. Almost a third of the high-end mobile phones, such as the iPhone and the latest models of Blackberry and Android-based phones, sold at the Mobile Store are paid for through instalments. The company, which rolled out EMI schemes at its 1,200 stores across the country over the past couple of months, recently became India's largest seller of BlackBerry smartphones. Instant approval of loans and minimal documentation help speed up EMI-based transactions, says Parag Rao, senior executive VP, HDFC Bank. He says the bank has seen a more than 100% spurt in this loan category over the past year with an average transaction of 30,000. "Since the amounts are much smaller compared to home or car loan, the EMIs don't pinch much," he says.

Godrej Agrovet to foray into micro-irrigation business

MUMBAI: Godrej Agrovet Limited (GAVL), a Godrej Industries company, plans to enter the micro-irrigation business by setting up a new subsidiary.

"We have big expansion plans for our agriculture business under GAVL. Under GAVL, we are soon planning to foray into micro-irrigation business, including drip irrigation, by forming a new subsidiary," Godrej Industries Chairman Adi Godrej said here.

The new subsidiary will be formed this fiscal year, he added.

The size of the market for micro irrigation systems, which involve drip and sprinkler irrigation, is around Rs 3,000 crore in India.

Meanwhile, GAVL has formed a subsidiary, Godrej Seeds and Genetics Limited (GSGL), which will serve as its vehicle for entering the hybrid seed business in the country.

GSGL, to be based in Hyderabad, will focus on three major crop seeds -- maize, paddy and bajra -- for distribution in states like Andhra Pradesh, Bihar, Karnataka and Maharashtra and will handles all existing hybrid seed sales and breeding activities previously managed by Godrej Agrovet.

"We believe the future of the Indian seed industry is still being written. Despite the presence of multinational players, there remains tremendous scope for introducing superior germplasm to Indian farmers. For a few years now, we have been working quietly in this space and we are ramping up our efforts for a major commercial debut," GAVL Managing Director Balram Singh Yadav said.

GAVL is a diversified agri-business company having interests in animal feed, oil palm plantation, agri-inputs and poultry.

Its sales jumped by 40 per cent in the first quarter of FY2011-12, its best-ever first quarter performance, vis-a-vis the first quarter of FY'11.

Meanwhile, speaking on the potential of the agri-businesses, Godrej observed they have reported strong growth in revenues and profits owing to robust demand for products across business segments.

All of GAVL's business verticals, including oil palm, agri-inputs and animal feeds, are poised to deliver significant growth, he said.

The oil palm business has been an outperformer during the quarter, with maturing plantations yielding higher output, Godrej said, adding that GAVL also has new products in the pipeline for FY2011-12.

Meanwhile, Godrej Industries' consolidated net profit grew by 46.34 per cent to Rs 71.33 crore in the first quarter of FY'12, compared to Rs 48.74 crore in the corresponding quarter of the previous year.

Godrej Appliances on product launch spree, to introduce TV sets

LUCKNOW: Godrej Appliances is on an aggressive launch drive and plans to introduce atleast one new product or model every four months.

With a number companies entering into the home appliances segment, Godrej has taken course to launching newer models and innovative products in the home appliances segment to beat the clutter and grow its market share.

Assistant Vice President, Godrej Appliances, Rajeev Dube said that they are present in all kinds of home appliances and are also testing the market for colour televisions, which was one gap in their portfolio.

"We have soft launched TV sets in Tamil Nadu, West Bengal, Kerala, Andhra Pradesh and parts of Maharashtra. We are testing the market response and have got encouraging response" said Mr Dube.

The company plans to launch either a new product or a technologically superior and innovative model of existing products very four months, he said.

The latest offering by the company has been the music-enabled refrigerators. The Edge SX Muziplay refrigerators besides working as a fridge would bring FM, MP3 music to kitchens and one can also recharge mobile sets through gadgets provided in the refrigerator.

Also Godrej plans to have its own exclusive showrooms across India and plans are underway to open them in the next couple of months.

With large number of consumer products the group would be opening showrooms, which would market all kinds of home appliances, decor, furniture under the Godrej brand name, said Mr Dube.