Canon says non-camera product prices to be hiked on Rupee fall
Canon India is considering hiking prices of its non-camera products by around 5 per cent from next month to offset the impact of the steep fall in the rupee.
Mumbai: Canon India is considering hiking prices of its non-camera products by around 5 per cent from next month to offset the impact of the steep fall in the rupee, which in the past 45 days has lost more than 8 per cent against the US dollar.
"The biggest impact of the rupee decline is on our cost and imports, which has impacted the margins. We have to pass on the cost increase to customers. It will take a month or two before the new prices become effective.
"We are thinking of a 5 per cent hike but have not yet decided the date, but we are looking at doing it in July," Canon India executive vice-president Alok Bharadwaj told PTI.
The price increase will be in the documentation products including laser printers, copier machines, inkjet printers and other IT peripherals segments which contribute half of the its turnover.
Computer firms like HP, Lenovo and mobile handset manufactures have said they cannot but pass on the cost increase by way higher import cost to consumers to protect their margins.
About 50 per cent of Canon India's revenues in 2012 came from cameras, 20 per cent from printers, 25 per cent from copiers and document management services and 5 per cent from the professional printing products business.
It can be noted that since May the rupee has been on a downward slope losing over 8 per cent since then and since March the loss has been over 10 per cent. After the US Fed chairman's last week said it will reduce its USD 85-billion monthly bond buying programme by the end of the year, the
rupee plunged to a lifetime low of 59.985 (intra-day) on Thursday. It closed at 59.27 against the dollar on Friday.
"We will do it for the B2B segment, which means all the printers, copiers, scanners. That is what we are contemplating now. The B2C, essentially the cameras and lenses, that we are not looking at now. We cannot afford another drop in the festive season which starts in the next two-three months," Bharadwaj said.
He also said the company was expecting a flat revenue growth this year at Rs 1,850 crore, same as last year, due to the weaker rupee. "This is kind of a flat year for us. We are not expecting any revenue growth. Particularly, with the rupee fall, we are not expecting any revenue growth over the year," Bharadwaj said.
"Overall, the industry is in a slowdown and the rupee fall has been a double-whammy. So we are not expecting any revenue growth this fiscal and expect to close at around Rs 1,850 crore same as last year," he added.
Admitting that price spike will impact sales at a time when demand is slackening, he said, "a big impact is that companies will now have to increase prices, which will then have an indirect impact on the topline. This is a very tricky situation. If we don't do anything, it is hitting our
bottomline by 8 per cent."
The company, however, is expecting a 10 per cent increase in its digital single-lens reflex (SLR) camera sales.
"Digital SLR will be better than last year. It is under positive impact. There are more triggers and demand drivers for the category. We are expecting to have 10 per cent growth in digital SLR," Bharadwaj said, adding last year it sold about 1 lakh units and is expecting at least 10 per cent growth this year over last year at around 1.1 lakh units.
The DSLR market is expected to be around 2.5 lakh units this year from 2.2 lakh units last year, he added.
The Japanese firm enjoys a market share of 23 per cent in the compact camera segment but Bharadwaj said the segment is likely to decline by 30 per cent for the the company as well as industry.
"Compact as a category is shrinking. We are getting impacted in the compact category. The entry-level is under bigger impact but the mid-end and higher level with superior functionalities are growing. The compact category should be down 30 per cent," he said, adding the market for the compact
cameras is expected to be 21 lakh units, compared to 30 lakh units last year.