The key growth drivers of refrigerator and AC business in India are likely to be: Growth of organized retail; Emergence of nuclear family and changing lifestyle trends; and Higher disposable income and greater aspirations bringing about a qualitative change in the preferences. The consumer durables market in India has seen a proliferation of brands and product categories in recent years. All the major international brands from Japan, Korea, US, Europe and China have launched in India. However, Blue Star, Voltas, Hitachi home solutions, Lloyds electric are the Indian companies in this market.

The Room Air conditioning demand declined by 15% in 2011-2012 after recording impressive 31% spike in 2010-2011. The industry players attribute the fall in demand for room air conditioners in FY 2011-12 due to a relatively mild summer coupled with intermittent rains and by the generally negative market sentiments due to reduced consumer spending. Rise in interest rates and inflationary pressures also impacted demand during this period.

After a sharp decline in the production in 11 out of 12 months in FY12, refrigerators output has reported improvement since beginning of FY12. Cumulative output has increased 19% to 3515 thousand units in the four months ended July 12. Healthy increase in the refrigerators production has been on the back of volatile rupee, which curtailed the imports and improvement in the domestic demand on a lower base.

Non-ferrous metals like Aluminum, Copper play a very important role in the composition of raw material basket. Non-ferrous metal prices have flared up in the recent times, especially after monetary measures to boost liquidity by EU and US. Between 31^st August 2012 and 15^th September 2012, the spot copper prices at MCX rose by 10%, while that of Aluminium sizzled by 16%. Aluminium prices were lower on y-o-y basis for 8 months in succession from January to August 2012. Only this rally helped the prices to record 2.3% increase in September 2012, based on data through 28^th September 2012.

Copper prices recorded single digit growth to negative growth between October 2011 through August. But the massive rally in September 2012, helped it to record 11.6% growth in September 2012 on y-o-y, based on data through 28^th September 2012.

India's current penetration level of air-conditioners is a mere 3%, which presents significant opportunities to the players in the air-conditioners business. Similarly, as the country benefits from demographic transition, we can expect healthy growth in demand for entire range of consumer durables, including refrigerators and air conditioners.

The sharp rise in input costs and increase in other manufacturing costs, intense competition from imports in general and from China in particular, besides relatively sluggish demand is near term concern. Despite this, the consumer electronic players have lined up slew of new products and variants, to cash in on the festive demand.