The blistering heat may be inconvenient for people, but durable firms are cheering the early onset of summer this year. The west, east and parts of the north are seeing daily temperatures of 34-35 degree Celsius, prompting consumers to turn on their air conditioners, coolers and fans. Firms are expecting around 35-40% year-on-year growth in sales this year too, thanks to the growing heat.
“Last year, air conditioners saw around 35-40% sales growth, while refrigerators saw around 12-15% sales growth during the summer months. This year should be more or less in line with the last year’s sales growth numbers given the build-up in heat in the recent weeks,” Kamal Nandi, business head and executive vice-president, Godrej Appliances, said.
While the Indian Meteorological Department (IMD) has forecast rains on March 14 (Holi) in Delhi and north, temperatures are likely to pick up post the festival, experts said. The north, west, south and east contribute 38%, 23%, 22% and 17%, respectively, to AC sales.
“Last year, the demand for ACs set in very late – by the end of April. This year, it has started to show up early. Last year, the demand rose by 40% to around 14-15 million. Based on the order book, we are expecting the demand to be at around 18 million this year,” Ajay Singhania, MD & CEO of Epack Durable, an original design manufacturer for ACs, said.
Unlike last year, when there was a capacity constraint, especially in ACs, this year some executives say there are no major issues in supplies, though Singhania warns of a supply deficit in compressors and copper tubes due to quality control issues. The Bureau of Indian Standards is also recertifying factories in international locations from where players import critical components, which is likely to hurt production around May-June, when there is a heat build-up in the north, a big market.
Typically, around 40-50% of an AC’s components, including compressors, are imported from countries such as China. Imports began right after Diwali to ensure there was no significant shortage during the initial summer months of February, March and April, experts said.
“The industry was prepared this year in terms of inventory to avoid supply issues,” NS Satish, president of Haier Appliances India, said. “Growth this year, much like last year, will be driven by premium products. Though, I do expect mass products to also get a sales boost this year, driven by the income tax cuts announced in the Budget,” he said.
While consumer offers, promotions and easy financing is expected to play a big role in pushing up sales, players are also laying special emphasis on warranties this year. For instance, both Godrej and Haier are offering a five-year comprehensive warranty for ACs (for Rs 7,000-8,000), which should drive up consumption. The warranty is expected to take care of all technical issues post the sale of the product with no hidden costs attached.
Voltas, on the other hand, is focusing on enhanced distribution, both in offline and online retail, to ensure products are easily accessible to consumers nationwide during summer.
“We are continuously expanding our reach through new brand store openings and offering easy financing options to make purchasing seamless for consumers. On the product front, we are leveraging our innovation pipeline with newer products and variants that cater to the evolving needs of our customers,” Pradeep Bakshi, MD & CEO, Voltas, said.