Companies look to tap demand in tier II & III cities

Mumbai: With the growth slowing down in tier I cities, consumer facing industries such as branded furniture, ceramic tiles, bath fittings and durables, which are directly impacted by prospects of the housing sector, are chalking out expansion plans in tier II towns which continue to grow at a steady pace.

At a time when sectors like automobiles are cutting down production due to fall in demand, H&R Johnson, Godrej Interio and Sony India are among those investing in enhancing their networks in tier II cities like Jalandhar, Hubli, Bharuch, Rourkela, Rajkot, Kolhapur, Bellary, Warangal, Sambalpur and suburbs of large metros, such as Virar and Dombivali near Mumbai and Faridabad near New Delhi, which are said to be bubbling with activity.

Godrej Interio, the home and office furniture retail business of Godrej & Boyce Manufacturing Co, for instance, has lined up a capital expenditure of around Rs 80 crore on expansion plans this year. H&R Johnson, which is the largest tile maker, has invested around Rs 250 crore in adding capacities, while Sony India is increasing its network of sales channels, including brand shops, national chain stores and distributors from around 10,000 to 12,200 in the current fiscal year.

"There is a downturn, but it is more so in the tier I cities. It's not so much in the tier II cities. We realized it is time we must not sit back on our expansion plans," said Anil Mathur, COO, Godrej Interio, which recently opened a franchisee store in Virar, where it believes construction activity is on in full swing.

Godrej Interio has opened 23 suburban stores in the last 6 months and will add approximately 20 more in the coming six to eight months. "Earlier, growth in tier I cities was at 21% and in tier II, it was 17%. Now, the indicator is showing tier I growth coming down to 12%, whereas tier II remains at 17-18%," said Mathur.

H&R Johnson, which admits that economic slowdown has hurt demand for home purchases in tier I, is having a re-look at its business and marketing strategy to capitalize on the potential growth in tier II cities. The company is set to start marketing operations in 16 new locations to increase penetration in tier II & tier III centres. "The spending power in the customers' hands in tier II & tier III geographies has also increased over the last 5-6 years which offers a great potential to tap for a large size of their wallet," said R Kurup, chief marketing officer, H&R Johnson.

Wherever consumers buy new homes, they would also be expected to consider purchase of new consumer durables. "Tier II/III markets can be the future growth drivers for consumer durables given the growing disposable incomes, rising aspirations of people to own quality products and improved infrastructure support that the government is providing with respect to the development of these cities," said Sunil Nayyar, senior general manager, sales, Sony India. The company gets a higher contribution of 56.50% from tier II and tier III cities compared to 40.80% from tier I cities and the company expects to maintain it at the same level in the near future as well.

Sony India eyes Rs 2,000 crore business this festive season

KOLKATA: Consumer electronics major Sony India today said it is eyeing business worth Rs 2,000 crore during the current festive season, a 35 per cent growth over last year.

"We are aiming at sales of Rs 2,000 crore during this festive season, from August to October," Sony India Senior General Manager (Sales) Sunil Nayyar said here today.

He said the company hopes to garner sales of Rs 245 crore from the eastern region during the Durga Puja.

Nayyar said the growth would be in line with expansion in the overall market but there won't be a big shift in the market share in the major product areas that it operates in.

He said all three major products, television, cameras and laptops are expected to do better than last year.

The company is targeting a turnover of Rs 7,000 crore for the entire fiscal, about 30 per cent higher than 2010-11.

By 2015, the share of Sony's Indian operations in its total global turnover is expected to grow to 10 per cent, almost double from about 5 per cent currently,

Sony India eyes sales turnover of Rs 7,400 crore this fiscal

KOCHI:Sony India was targeting a sales turnover of Rs 7,400 crore this fiscal, a 35 per cent growth from the previous year, a top official today said.

The last fiscal's turnover of the company was Rs 5,400 crore.

Announcing its plans for Kerala during the 'Onam' festival,Sony India Managing DirectorMasaru Tamagawa told reporters here that the company was eyeing a growth of 46 per cent in sales during the festival season to touch Rs 110 crore during the July-September this year.

During the three-month festival period in 2010, the turnover was Rs 74 crore and Rs 50 crore in the same period in 2009.

Banking on its innovative technology and the new product line up, retail network expansion and heavy marketing investment, the company was positive about consolidating its top position in key product categories, he said.

Sony will expand its distribution network in the state to 360 outlets from the present 290 during this financial year and has set apart Rs 6 crore for market promotion during Onam.

Tamagawa said every year almost 40 per cent of the company's total sales in the state are achieved during the festive period.

During this year the company was targeting a business of Rs 285 crore from the state against last year's Rs 200 crore.