Home Appliance Industry of Pakistandocshare01.docshare.tips/files/17569/175691316.pdf · Internship...

Home Appliance Industry of Pakistan Internship Report

Standard Chartered Bank Pakistan Ltd. Origination & Client Coverage

Whole Sale Banking

Presented by:

Ahmad Shahzad Saeed

Presented to:

Asad Altaf (Director OCC)

Table of Contents Executive Summary ....................................................................................................................................... 1

Home Appliance Industry of Pakistan ........................................................................................................... 2

Gray Market: ................................................................................................................................................. 2

Segment Selection Criterion: ........................................................................................................................ 3

Over View of Home Appliance industry in pakistan ..................................................................................... 3

Important factors ...................................................................................................................................... 4

Home Appliance Industry.............................................................................................................................. 4

General Purchase Patterns: ...................................................................................................................... 4

Preferred features for Imported & Local Brands: ..................................................................................... 5

Demographics of Top Home Appliances Brands’ Users ............................................................................ 6

Market Analysis ............................................................................................................................................. 6

Air conditioner .......................................................................................................................................... 6

Historical Performance: ........................................................................................................................ 6

Company Wise Analysis ........................................................................................................................ 8

Haier: ..................................................................................................................................................... 8

ORIENT: ............................................................................................................................................... 10

PEL: ...................................................................................................................................................... 12

Dawlance: ............................................................................................................................................ 14

Refrigerator ............................................................................................................................................. 16

Historical Performance: ...................................................................................................................... 16

Dawlance (Refrigerators & Deep Freezers): ....................................................................................... 18

Haier: ................................................................................................................................................... 19

Orient: ................................................................................................................................................. 21

Waves: ................................................................................................................................................. 23

PEL: ...................................................................................................................................................... 24

Pre Budget Situation ................................................................................................................................... 27

Impact of Budget on Home Appliance Industry ...................................................................................... 27

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Executive Summary

Over all Home appliance industry is fragmented and is equally divided between local

manufacturers and importers. Market in Pakistan is such that big multinational players tend to

just penetrate with local joint ventures or opening up its marketing and sales division as in case

of Mitsubishi, Samsung with Orient and LG with PEL, and Haier as a subsidiary of global Haier.

Reasons behind such strategy are

i. Already presence of local established players like PEL, Dawlance and Waves.

ii. Not so lucrative market due to easily available smuggled goods.

iii. Pie is too small to jump in for MNCs.

More over home appliance industry faced a recession in late 2008 and 2009, but 2010 data shows

that it had started recovering, but that time allowed new players like Haier establish well in the

market on the account of lack in performance by local players like Dawlance and PEL. The

recovery would have been much better if country was not to face floods of 2010. Sales were

impacted but as we know rehabilitation and recovery of affected areas is under process which

indicates that home appliances are going to be part of these recovery processes, so future of the

industry is going to be further brighter.

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Home Appliance Industry of Pakistan Home Appliance and Electronic goods are the main and integral components of daily life. A user

very frequently uses the Home Appliances and Electronic goods. Home Appliances and

Electronics goods form an industry, which needs to be faced with favorable policies by the state.

Home appliances are generally divided into two segments, White Goods and Black Goods, white

goods contain heavy consumer durables such as Air Conditioners, Refrigerators, Deep Freezers

and Microwaves where as Black goods contain relatively light electronic consumer durables such

as TVs, radios, digital media players, and computers.

Gray Market: Gray market goods are defined as items manufactured abroad and imported into the country

without the consent of the trademark holder. Gray market goods are not counterfeits; however,

differences may exist between these goods and those goods produced for the sale in that specific

country. Some of these differences may involve warranty coverage or compliance with country’s

regulatory requirements. The effect of this parallel system is that similar goods are available in

the US at different prices. Normally grey market exists in a country because of smuggling.

Pakistan is heaven for grey markets because of easier smuggling routes and high consumer

acception. Since grey products are not taxed so they are substantially cheaper than market’s other

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legal products. In Pakistan major component of grey market consists of black goods like

computers and mobiles.

Segment Selection Criterion: In pakistan white goods market is more formal, more regularized and more legal as compared to

black goods market. As a result companies operating in white goods market are pakistani based

or they have formal offices and plants where as if we see at T.V and mobile market, this sector is

very informal and many times gray. Even the leagal products of mobile and T.Vs are imported

by big importers, so no exact data is available as far as black good market is concerned.

In my report I will focus on white goods market since its more formal and reguralized and

second reason is because our existing and possible clients are from this segment.

Over View of Home Appliance industry in pakistan According to the report by Daily Times (www.dailytimes.com.pk), the business environment is

highly favorable for investment in home appliance industry of Pakistan. Therefore home

appliance industry is getting attention of foreign investors as well. China‟s home appliance giant

Haier has established the industrial zone in Punjab, Pakistan which is its second overseas

manufacturing base after United States. This is joint venture in home appliance industry between

Government of China and the private sector of Pakistan. It is very large and growing business

sector in Pakistan. In Pakistani home appliance market, there are two types of companies

involved in appliance business those are local and imported manufacturers and marketers. They

are engaged in both aspects of marketing that is business-to-business marketing (B2B) and

business-to-consumer (B2C) marketing. In business-to-business, the manufacturers sell their

products to retailers those are known as dealers. Dealers are responsible for retail selling to the

end users. A few of the companies also have their own retail outlets also. Since last few years the

manufacturers are facing a competitive and challenging situation in business-to-business

relationships due to following reasons.

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Important factors There are three factors to take into account for home appliance industry in Pakistan. Firstly, the

challenging situation has been created by dealers whose profits have been reduced due to certain

policies adopted by manufacturers in the last few years. So they are looking forward to new

manufacturers entering in the industry. More profits and better services are also being included

in their demands. Secondly, the new entrants in the manufacturing industry including

manufacturers and importers, either they are local or foreign investors have challenged the

domination of existing manufacturers and importers. Thirdly, due to the expansion in market size

horizontally and vertically, competitive situation has been increased among manufacturers within

the industry. Fluctuating customer requirements and competitive forces are putting more pressure

on marketers. They are demanding superior marketing strategy and tactical execution (Anni, I.

2002). According to Peter Cheverton, the relationships between B2B suppliers and customers

have become a vital source of competitive advantage. Many companies are moving from

traditional marketing towards relational-oriented marketing (Cheverton, P. 2004). Suppliers have

acknowledged that improved customer- supplier relationships increase key accounts customer

retention and loyalty more successfully (Abratt, R. & Kelly, P.M. 2002).

Home Appliance Industry Home appliance industry of pakistan include names like WAVES, PEL, Dawlance, Haier, Orient

etc. A survey has been conducted on various aspects affecting home appliance industry. Results

of the survery are as following.

General Purchase Patterns: General purchase patterns contain reason for buying, brand preference, purchase preference etc.

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Preferred features for Imported & Local Brands:

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Demographics of Top Home Appliances Brands’ Users

Market Analysis Market analysis and major players involve in each product line are as following:

Air conditioner Air conditioner market is one of the biggest segment in home appliance idustry. Major players

involved in Air conditioner market are:

Dawlance

PEL

Waves (Cool Industries)

Haier

Orient

Historical Performance:

In 2010, Total units of Air conditioner sold are 259377. In

Company Market Share in 2010

Haier 37%

Dawlance 23%

PEL 10%

Orient 24%

Others 6%

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2007, it was 370,000 units. So actually market for Air conditioners has shrunk a lot in last 5

years. Industry performance during last 5 years has been

In 2010, market was 70% of its size in 2007, but the good thing is that it recovered from even

more depressing years of 2008 and 2009.

Company wise market shares from 2007-10 has been following.

A.C Market Shares

2007 2008 2009 2010

Haier 27% 42% 36% 37%

Dawlance 38% 21% 23% 23%

PEL 9% 12% 12% 10%

Orient 20% 19% 23% 24%

Others 5% 6% 6% 6%

100%

57% 59%

70%

0%

20%

40%

60%

80%

100%

120%

2007 2008 2009 2010

Industry Size

Industry Size

27%

42% 36% 37% 38%

21% 23% 23%

9% 12% 12% 10%

20% 19% 23% 24%

5% 6% 6% 6%

2007 2008 2009 2010

A.C market Shares 2007-10

Haier Dawlance PEL Orient Others

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In 2007 Dawlance was the market leader with 38% of market and also the total market size was

the highest in 2007. In very next year Haier took the leading market share with 42% and

Dawlance dropped down to 21%. This was the time when Haier was extensively promoting its

products. As a result in 2010, Haier is the market leader with 37% of market share, Orient is 2nd

with 24% and Dawlance is 3rd

place with 23%.

Unit Sales of Air conditioners from 2007 to 2010.

Company Wise Analysis

Haier:

Haier was incorporated in 1984 only producing household refrigerators. Haier currently

manufactures a wide range of household electrical appliances, 15,100 varieties of items in 96

product lines, and exports products to more than 100 countries.

Haier Pakistan is the Pakistan Sales & Marketing division of the international Haier Group, a

globally recognized manufacturer of world-class electrical home appliances. The joint venture is

between Ruba General Trading Company and Haier Group of China.

Haier started efforts to capture market by extensive promotions and other market efforts in 2005.

Before the main players were Dawlance, PEL, General and some other privately imported

brands. In 2007 it had captured 27% of market share which jumped to 42% in next year. In 2010,

Haier is the market leader with 38% market share. In times when actual market has reduced

by 30%, increasing its market share by 15% and becoming market leader is a great

achievement.

2007 2008 2009 2010

Haier 100,000 89,123 78,555 94,796

Dawlance 140,000 45,450 50,500 60,600

PEL 35,000 25,250 25,250 26,260

Orient 75,000 40,400 50,500 62,721

Others 20,000 12,000 13,000 15,000

Total 370,000 212,223 217,805 259,377

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Month wise Sales of Haier for 2007-10 are given below

Month 2007 2008 2009 2010

Jan 1,600 7,844 2,481 835

Feb 5,000 7,843 5,599 4,536

Mar 8,000 7,844 14,880 12,920

Apr 26,000 13,474 7,445 17,543

May 20,000 19,981 18,655 18,700

Jun 20,000 18,965 14,657 14,535

Jul 5,000 4,210 5,475 3,227

Aug 3,000 4,160 4,223 6,500

Sep 2,000 578 2,838 4,500

Oct 1,400 2,998 1,586 3,500

Nov 3,000 692 523 3,500

Dec 5,000 534 193 4,500

Year End 100,000 89,123 78,555 94,796

Market Share 27% 42% 36% 37%

Sales Forecast:

If we graph these sales figures there is a lot of seasonality involve in sales figure which is

obviously due to product type, more sales in summers and lesser in winters. On average sales

have been around 7500/month.

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Based on this we can predict sales for next 2 years i.e. 2011 & 2012. Using these seasonal ties

and some forecasting techniques, forecasted sales come out to be.

Forecasted Sales Unit Month 2011 2012

Jan 1,522 1,674

Feb 4,924 5,416

Mar 12,971 14,268

Apr 15,560 17,116

May 18,785 20,664

Jun 14,882 16,370

Jul 3,748 4,123

Aug 5,897 6,487

Sep 3,952 4,347

Oct 3,079 3,387

Nov 2,787 3,065

Dec 3,489 3,838

Year End 91,596 100,755

ORIENT:

Orient Group of Companies manufactures a range of consumer electronics products like air

conditioners, refrigerators, microwave ovens water dispensers and vacuum cleaners. Orient also

holds the assembly and selling rights of Samsung and Mitsubishi electronics in Pakistan. These

products are manufactured and assembled at factory established at Multan Road, just 26

kilometers away from the Lahore city centre. It comprises of the manufacturing plant, corporate

and sales offices, warehouses, and assembly line for all its products. The factory not only

manufactures all of Orient Group of Companies’ product range, but also assembles Samsung air

conditioners, televisions, home theatres and Mitsubishi air conditioners on location.

In past 5 years Orient has been able to sustain rather slightly improve its market position and

reason behind its success has been Japanese brand reputation (Japanese products are considered

to be better in performance in Pakistan) and extensive promotions.

In 2007, Orient was the third largest player and over the year due to poor performance by

Dawlance, Orient has managed to secure 2nd

position in market with 24% market share.

Month wise Sales of Orient for 2007-10 are given below

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Historical Sales Orient 2007 2008 2009 2010

January 4500 2400 3000 621

February 4500 2800 3500 3105

March 7500 4000 5000 8694

April 9750 5600 7000 11178

May 13500 8400 10500 12420

June 15750 8400 10500 9315

July 4500 2000 2500 1863

August 2250 1600 2000 4347

September 2250 1200 1500 3105

October 3000 1200 1500 2484

November 3000 1200 1500 2484

December 4500 1600 2000 3105

Year End 75000 40400 50500 62721

Market Shares 20% 19% 23% 24%

Sales Forecast:



have been around 5000 units/month. Based on this seasonality and trends in sales figures we can

predict sales for the future.

Using these we can predict sales for next two year i.e. 2011-2012.

Orient 2011 2012

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January 2,383 2,373

February 3,834 3,819

March 5,786 5,763

April 7,333 7,304

May 9,865 9,825

June 10,381 10,339

July 2,894 2,883

August 2,083 2,075

September 1,551 1,545

October 1,819 1,812

November 2,102 2,094

December 3,093 3,080

Year End 53124.75 52912.43

Expected Market Shares 21% 21%

PEL:

Pak Elektron Limited (PEL) is the pioneer manufacturer of electrical goods in Pakistan. It was

established in 1956 in technical collaboration with M/s AEG of Germany. In October 1978, the

company was taken over by Saigol Group of Companies.

PEL is not a very big player in A.C segment and holds market share of just 10%. PEL is also

manufacturing LG home appliances under LG license in Pakistan. PEL has been in Pakistan

since very long and its presence is very solid with loyal customer base. Historical sales figures

and market shares are like:

Historical Sales PEL 2007 2008 2009 2010

January 2,100 1,500 1,500 260

February 2,100 1,750 1,750 1,300

March 3,500 2,500 2,500 3,640

April 4,550 3,500 3,500 4,680

May 6,300 5,250 5,250 5,200

June 7,350 5,250 5,250 3,900

July 2,100 1,250 1,250 780

August 1,050 1,000 1,000 1,820

September 1,050 750 750 1,300

October 1,400 750 750 1,040

November 1,400 750 750 1,040

December 2,100 1,000 1,000 1,300

Year End 35,000 25,250 25,250 26,260

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Sales Forecast:



have been around 2100 units/month. Based on this seasonality and trends in sales figures we can

predict sales for the future. Monthly sales and seasonality effect calculated on Crystal Ball.

Based on this method we get future sales prediction for 2011 and 2012. Future monthly sales and

expected market share are as following:

Forecasted Sales for 2011-12

PEL 2011 2012

January 689 689


March 3,762 3,913

April 4,613 4,797

May 5,213 5,422

June 4,194 4,361

July 1,092 1,136

August 1,933 2,010


October 1,074 1,117



Year End 27,978 29,069


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Dawlance:

Dawlance has been present in home appliance market from a very long time and is a very

established brand. Dawlance is the 7th

most favorite brand in Pakistan (out of 3500 brands). It is

among Top 2 ‘Top of mind (TOM)’ Brands in all product categories. Research revealed that

Dawlance is in every 2nd

house hold in Pakistan (out of those households which have

appliances). Dawlance has been the market leader from last many years and main reasons behind

its success have been reliable brand, huge customer base and their brand loyalty, and superior

product. Recently their market position has been challenged by Haier and they have lost 7%

market in last 4 years. Month wise sales for last 4 years have been following.

Month wise sales for Dawlance are as following:

Historical Sales Dawlance 2007 2008 2009 2010

January 8,400 2,700 3,000 600

February 8,400 3,150 3,500 3,000

March 14,000 4,500 5,000 8,400

April 18,200 6,300 7,000 10,800

May 25,200 9,450 10,500 12,000

June 29,400 9,450 10,500 9,000

July 8,400 2,250 2,500 1,800

August 4,200 1,800 2,000 4,200

September 4,200 1,350 1,500 3,000

October 5,600 1,350 1,500 2,400

November 5,600 1,350 1,500 2,400

December 8,400 1,800 2,000 3,000

Year End 140,000 45,450 50,500 60,600


*Company faced a huge decline in monthly sales in 2007-08. In only one year company lost more than 17% of

its market share.

Sales Forecast:



have been around 6500/month. Based on this seasonality and trends in sales figures we can

predict sales for the future. Monthly sales and seasonality effect calculated on Crystal Ball.

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Predicted sales for 2011-2012 are as following:

Forecasted Sales Dawlance 2011 2012

January 1,037 1,037


March 6,474 6,474

April 7,967 7,967

May 9,868 9,868

June 9,077 9,077

July 3,310 3,310

August 5,479 5,479


October 3,210 3,210



Year End 59,021 59,021

Market Shares 24% 23%

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Refrigerator

Refrigerator is the largest product type in home appliance market with around 900,000 units sold

in 2010. Major players in this segment are

Haier

Dawlance

PEL

Orient

Waves

Company 2010

Haier 15%

Dawlance 39%

PEL 20%

Orient 6%

Waves 16%

Others 4%

At the present Dawlance is the market leader with 41% market share with PEL (21%) at 2nd

and

Waves (17%) in 3rd

place.

Historical Performance:

In 2010, total of 890,000 units of refrigerator and deep freezers were sold, this figure was

829,000 in 2007. There was a dip in sales for 2008 and 2009 mainly due to global financial

crisis, but it seems like industry has recovered from it and sales are on the move. Graph below

explains the total market size.

Historical market shares for all the companies from 2007-10 has been following:

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Historical Market Shares (REF & DF)

2007 2008 2009 2010

Haier 10% 10% 10% 15%

Dawlance 46% 46% 43% 39%

PEL 20% 20% 22% 20%

Orient 5% 5% 5% 6%

Waves 15% 16% 16% 16%

Others 4% 4% 4% 4%

Over the years, Dawlance has been the market leader because of its long time presence and hue

brand loyalty but its market share has been on a decline and it lost 7% in last 4 years. And most

of its market share was taken away by Haier. Haier has been very active since 2005 and their

sales are increasing. Waves, PEL and Orient have sustained their market shares. Over All

Refrigerator market has been much stable in terms of market shares.

10% 10% 10% 15%

46% 46% 43%

39%

20% 20% 22% 20%

5% 5% 5% 6%

15% 16% 16% 16%

4% 4% 4% 4%

-5%

5%

15%

25%

35%

45%

55%

65%

2007 2008 2009 2010

Market Shares (REF & DF) 2007-10

Haier

Dawlance

PEL

Orient

Waves

Others

Unit Sales of Refrigerator & Deep Freezer

2007 2008 2009 2010

Haier 79,913 83,312 72,466 131,020

Dawlance 385,086 377,175 321,853 346,414

PEL 167,700 167,294 163,315 177,953

Orient 39,779 37,437 37,561 52,124

Waves 124,867 128,206 119,749 141,023

Others 31,823 31,714 31,881 31,982

Total 829,168 823,374 744,993 890,231

Market Size 100% 99% 90% 107%

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Company wise Analysis

Dawlance (Refrigerators & Deep Freezers):

Dawlance has been present in refrigeration market from a very long time and is a very

established brand. Dawlance is the 7th

most favorite brand in Pakistan (out of 3500 brands). It is

among Top 2 ‘Top of mind (TOM)’ Brands in all product categories. Research revealed that

Dawlance is in every 2nd

house hold in Pakistan (out of those households which have

appliances). Dawlance has been the market leader from last many years and main reasons behind

its success have been reliable brand, huge customer base and their brand loyalty, and superior

product. Recently their market position has been challenged by Haier and they have lost 7%

market in last 4 years. Month wise sales for last 4 years have been following.

Dawlance 2007 2008 2009 2010

January 19,498 18,987 10,378 17,790

February 24,218 27,062 17,297 22,216

March 36,741 38,274 21,026 32,704

April 44,330 43,048 36,652 30,534

May 48,758 47,386 43,301 28,278

June 52,012 50,523 51,789 31,154

July 37,822 40,211 31,353 21,596

August 38,115 37,074 25,785 31,464

September 19,205 15,249 18,866 33,410

October 24,218 20,187 23,135 34,960

November 20,378 19,887 22,865 28,278

December 19,791 19,287 19,406 34,030

Year End 385,086 377,175 321,853 346,414


Future Outlook:

If we graph these historical sales figure and check for seasonal trends, e.g. peak months for sale

of refrigerators and Deep Freezers are in summer whereas in winter sale are on a decline. Also

we can predict the future sales based on historical figures. With these forecasted sales figures,

expected market shares for 2011-12 have also been calculated.

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Based on this graph sales forecast for 2011-12 are:

Forecasted sales for 2011-12

Dawlance 2011 2012

January 18,857 19,989

February 23,549 24,962

March 34,666 36,746

April 32,366 34,308

May 38,129 40,417

June 46,489 49,278

July 35,592 37,728

August 33,352 35,353

September 35,415 37,539

October 37,058 39,281

November 29,975 31,773

December 36,072 38,236

Year End 401,519 425,610


Haier:

Haier Pakistan is the Pakistan Sales & Marketing division of the international Haier Group, a globally

recognized manufacturer of world-class electrical home appliances. Haier doesn’t have its

manufacturing plant in Pakistan, yet it is the highest growing company mainly due to its good products,

low prices and effective media campaigns. In refrigerator market, Haier’s performance hasn’t been as

-

10,000

20,000

30,000

40,000

50,000

60,000

Mar

-07

Jul-

07

No

v-0

7

Mar

-08

Jul-

08

No

v-0

8

Mar

-09

Jul-

09

No

v-0

9

Mar

-10

Jul-

10

No

v-1

0

Mar

-11

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11

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v-1

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Mar

-12

Jul-

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v-1

2

Dawlance

Dawlance

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good as it is in Air Conditioner market, yet it experienced the highest increment in its market share by

5% from 2009-10. Haier’s historical sales for 2007-10 have been like:

Historical Sales Haier 2007 2008 2009 2010

January 3,614 6,403 2,735 6,424

February 6,660 9,528 3,474 8,015

March 9,254 13,081 5,910 12,431

April 11,351 11,470 8,578 10,684

May 7,975 11,655 10,116 10,009

June 4,403 8,083 5,210 11,607

July 6,923 8,164 6,484 7,236

August 5,784 3,387 7,060 12,889

September 6,149 2,414 5,641 13,104

October 6,475 4,213 6,941 13,846

November 4,683 2,538 5,071 11,047

December 6,642 2,376 5,246 13,728

Year End 79,913 83,312 72,466 131,020


Future Outlook:

If we graph these historical sales we find less seasonality mainly because it is a new company in

the market and sales figures are not stable, also the economic conditions in 2009 and 2010 hurt

new companies a lot. On the basis of these historical sales future sales forecasting has been

done. Historical and future sales outlook has been shown in graph.

-

5,000

10,000

15,000

20,000

Mar

-07

Jul-

07

No

v-0

7

Mar

-08

Jul-

08

No

v-0

8

Mar

-09

Jul-

09

No

v-0

9

Mar

-10

Jul-

10

No

v-1

0

Mar

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Jul-

11

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v-1

1

Mar

-12

Jul-

12

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v-1

2

Haier

Haier

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Based on these projection future sales figures for 2011-12 and expected market share would be:

Forecasted sales for 2011-12

Haier 2011 2012

January 6,809 7,218


March 13,177 13,967

April 11,325 12,005

May 10,610 11,246

June 12,303 13,042

July 7,670 8,130

August 13,662 14,482

September 13,890 14,724

October 14,677 15,557

November 11,710 12,412

December 14,552 15,425

Year End 138,881 147,214


Orient:

Orient Group of Companies manufactures a range of consumer electronics products like air

conditioners, refrigerators, microwave ovens water dispensers and vacuum cleaners. Orient also

holds the assembly and selling rights of Samsung and Mitsubishi electronics in Pakistan.

Orient is a very small player in Refrigerator market and holds 6% market share in 2010. Over the

years it has improved very little with 1% increase in market share in last 4 years despite its

individual sales figures improved by 30% since 2006.

Historical sales for Orient have been like:

Orient Historical Sales 2006-10 Orient 2007 2008 2009 2010

January 1,989 1,853 1,236 2,633

February 2,387 2,595 1,853 3,159

March 3,580 3,707 2,224 4,739

April 4,773 4,448 4,448 4,739

May 5,171 4,819 5,189 4,212

June 5,569 5,189 6,301 4,739

July 3,978 4,077 3,707 3,159

August 3,978 3,707 2,965 4,739

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September 1,989 1,483 2,224 5,265

October 2,387 1,853 2,595 5,265

November 1,989 1,853 2,595 4,212

December 1,989 1,853 2,224 5,265

Year End 39,779 37,437 37,561 52,124


Future Outlook:





Based on these projections, future sales figures are:

Forecasted Sales for 2011-12 Orient 2011 2012

January 2,790 2,958


March 5,023 5,324

April 5,023 5,324

May 4,465 4,733

June 5,023 5,324

July 3,349 3,549

August 5,023 5,324


October 5,581 5,916



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2,000

4,000

6,000

8,000

Mar

-07

Jul-

07

No

v-0

7

Mar

-08

Jul-

08

No

v-0

8

Mar

-09

Jul-

09

No

v-0

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Mar

-10

Jul-

10

No

v-1

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Mar

-11

Jul-

11

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v-1

1

Mar

-12

Jul-

12

No

v-1

2

Orient

Orient

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Year End 55,251 58,566

Market Shares 6% 6%

Waves:

Waves (Cool Industries Pvt. Ltd) was established in 1973 and grew to a leading Home Appliances

manufacturing Company in Pakistan, in a very short span of time. Waves is mainly in Refrigerator and

Deep Freezer industry and it has the biggest customer base in the form of corporate clients like PEPSI,

Nestle, K&N Foods, Shezan, NURPUR, Dawn Foods and HICO etc. it is the biggest player in Deep Freezer

segment with more than 60% market share. Over all in Refrigerator and Deep Freezer market, it is the

3rd biggest player with 16% market share. Historical sales for Waves and its market share have been like:

Historical sales Ref & DF for 2007-10

Waves 2007 2008 2009 2010

January 6,890 7,050 5,314 7,778

February 10,079 10,942 8,857 11,265

March 13,825 14,770 11,208 15,518

April 11,104 11,292 10,817 10,688

May 13,646 13,908 13,779 12,030

June 13,601 13,844 15,033 12,068

July 11,193 12,026 10,754 9,885

August 11,840 12,090 10,111 12,758

September 6,243 5,774 6,568 10,725

October 10,079 9,730 10,080 14,175

November 8,830 9,060 9,500 12,030

December 7,537 7,720 7,728 12,105

Year End 124,867 128,206 119,749 141,023


Future Outlook:





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Forecasted Sales for 2011-12 Waves 2011 2012

January 8,244 8,739

February 11,941 12,657

March 16,449 17,435

April 11,329 12,008

May 12,752 13,517

June 12,792 13,559

July 10,478 11,107

August 13,523 14,334

September 11,369 12,051

October 15,026 15,927

November 12,752 13,517

December 12,831 13,601

Year End 149,484 158,453


PEL:

Pak Elektron Limited (PEL) is the pioneer manufacturer of electrical goods in Pakistan. It was

established in 1956 in technical collaboration with M/s AEG of Germany. In October 1978, the

company was taken over by Saigol Group of Companies.

PEL is currently the 2nd

largest player in Refrigerator and Deep Freezer market with 20% market

share. PEL is also manufacturing LG home appliances under LG license in Pakistan. PEL has

been in Pakistan since very long and its presence is very solid with loyal customer base. Its

market share has been the same over the year at 20%. Historical sales figures and market shares

are like:

-

5,000

10,000

15,000

20,000M

ar-0

7

Jul-

07

No

v-0

7

Mar

-08

Jul-

08

No

v-0

8

Mar

-09

Jul-

09

No

v-0

9

Mar

-10

Jul-

10

No

v-1

0

Mar

-11

Jul-

11

No

v-1

1

Mar

-12

Jul-

12

No

v-1

2

Waves

Waves

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Historical Market Shares 2007-10

PEL 2007 2008 2009 2010

January 8,385 8,282 4,851 8,988

February 10,062 11,595 8,085 10,785

March 15,093 16,564 9,702 16,178

April 20,124 19,876 19,404 16,178

May 21,801 21,533 22,637 14,380

June 23,478 23,189 27,488 16,178

July 16,770 18,220 16,170 10,785

August 16,770 16,564 12,936 16,178

September 8,385 6,625 9,702 17,975

October 10,062 8,282 11,367 17,975

November 8,367 8,282 11,319 14,380

December 8,426 8,282 9,702 17,975

Year End 167,723 167,294 163,363 177,953


Future Outlook:





Based on these projections, expected sales figures and market shares would be:

-

5,000

10,000

15,000

20,000

25,000

30,000

Mar

-07

Jul-

07

No

v-0

7

Mar

-08

Jul-

08

No

v-0

8

Mar

-09

Jul-

09

No

v-0

9

Mar

-10

Jul-

10

No

v-1

0

Mar

-11

Jul-

11

No

v-1

1

Mar

-12

Jul-

12

No

v-1

2

PEL

PEL

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Forecasted market Share 2011-12 PEL 2011 2012

January 9,527 10,098

February 11,432 12,118

March 17,231 18,124

April 16,987 18,219

May 15,243 16,157

June 17,148 18,379

July 11,432 12,118

August 17,325 18,154

September 19,152 20,213

October 19,087 20,074

November 15,243 16,157

December 19,026 20,197

Year End 188,833 200,009


of 29

Pre Budget Situation Before the announcement of budget, home appliance industry was on the recovery path from its 2008 &

2009 recession, floods in 2010 and energy crisis. Hence the recovery was a little slow, also imposed FED

on home appliances in budget 2010-11 worsened the situation. All this resulted in abnormal increase in

prices of appliances with increase of 5000 to 7000 a unit.

Impact of Budget on Home Appliance Industry Home appliance industry is subjected to various duties and taxes which directly have impact on it cost of

manufacturing and selling. Before 2011-12 budget home appliance industry was entitled to 17% GST, 1%

FED. Also there are some import duties and special duties on certain types of raw materials. In Federal

Budget 2011-12, Government of Pakistan has relieved home appliance industry through various changes

in taxes and duties. Changes have been following:

1. Sales Tax has been reduced from 17% to 16%.

2. FED (Federal Excise Duty) of 1% has been taken back.

3. Tariff rationalization on bars, rods and profiles of refined copper and copper alloy.

The above mentioned changes have reduced the costs for home appliance industry. These changes will be

transferred to end consumer by lowering of selling price, which would in return increase the sales units.

Dawlance reduces prices:

After the budget announcement, Dawlance was the 1st company to respond by lowering the prices of its

brand by stating that they are transferring the relief to its customers. This is what a news paper had to say

on this.

“Dawlance, the no. 1 home appliances brand of Pakistan has decided to offer reduced post-budget prices

with immediate effect.

As per the budget 2011-12, the government has provided some relief in terms of sales tax and excise tax

on home appliances. The relief will lead to reduced prices of home appliances which are applicable from

July 1st 2011 onwards. Yet again proving their reliability, the largest home appliances manufacturer has

extended this reduction in taxes through their extensive dealer network to their consumers with immediate

effect.”

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