Planning For A Contingency

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Monsoon may advance towards MP: METIMD predicts normal monsoonMonsoon within normal range: Met DeptLess monsoon rains this year, says IMD

: The dark clouds of drought are gathering momentum. While the steady trickle of bad news that this will have on industry and business is still being evaluated, there is no doubt that the spectre of drought is already a cause for concern both for industry and the government.

Delay in the monsoon in northwest India and poor rains in parts of western, southern and central India, has made sales and growth expectations of companies in various sectors topsy turvey. The most affected are the states of Punjab, Haryana, UP, MP and Maharashtra.

According to current data, only about 40 per cent of the cultivable area is irrigated and the rest 60 per cent are rainfed, and that explains the dependence of other sectors including industry’s on agriculture. How then will the industry be affected if the current trend continues? India Inc. makes an early estimate.

Consumer Durables
Take for instance colour televisions. The industry had expected, this year, to cross 9 million CTVs having achieved 4.2 million units by June. “But now it seems we will have to revisit our targets as substantial part of sales come from the rural areas. The industry may barely be able to touch a target of 9 million CTVs,” says Suresh Khanna, secretary general, CETMA. Rural area-driven sales are particularly affected.

Multinational companies like LG India and Electrolux, which have an urban bias, do not seem perturbed by the imminent failure of the monsoon. But, Beltek certainly seems to be disturbed.

LG Electronics India marketing head Salil Kapoor says, “The failed monsoon is bound to affect sentiment, especially in the white goods sector. However, even in 2002 when the monsoons were not good, we did not see a drastic slowdown in sales. Anyway, to tide us over the slow period, if any, we will make finance more available and increase ground level publicity in rural areas, which will feel the failure of the monsoon the hardest.”

Electrolux Kelvinator vice president (marketing & sales) Ajay Kapila feels that dipping prices and the increasing availability of finance will more than offset the emotional reaction to a failed monsoon. However, as a safety mechanism, Mr Kapila says, “The company will broadbase its distribution network, increase efficiency of its distribution chain, and will launch certain products that will catalyse demand in certain areas where the effect will be felt strongest.”