After some concerns over trade de-stocking last week following weather uncertainty, durable companies are back to projecting a buoyant sales outlook for the summer season as temperatures begin to climb again. The IMD on Monday projected a drier southwest monsoon this year, with an increase in heatwave days during the April-June period. The June quarter is considered the most important period for cooling category products giving makers over half their sales.
The increase in temperature is already beginning to show up with key consumption centres such as Mumbai, Delhi and Bengaluru touching 32 to 36-degree celsius. Cities such as Ahmedabad and Hyderabad are seeing temperatures at nearly 40-degree celsius, raising sales prospects for air conditioners (ACs), refrigerators, air coolers and fans.
Durable companies are projecting sales growth rates of 25-30% for the June quarter versus 15-20% they had estimated earlier for the period in categories such as ACs. This is despite a second price hike of around 5-7% undertaken by firms in ACs at the start of April to mitigate input cost pressures triggered by the West Asia war.
The first price hike of about 5-6% was undertaken in January this year to deal with a revision in the bureau of energy efficiency norms.
What do execs from the cooling industry say?
“The heat is growing in most parts of the country. For cooling products such as ACs and refrigerators, this is good news after a brief spell of unseasonal rains in March,” NS Satish, president, Haier Appliances India, said.
“While the summer has been delayed, we should still see around 20% volume growth and around 25% revenue growth in air conditioners this year,” B Thiagarajan, managing director, Blue Star, said.
Most durable firms are counting on an aggressive line-up of products, easy financing schemes, better warranty schemes and trade promotions to drive up sales. Panasonic Life Solutions, for instance, has lined up 57 new AC models this year including variants equipped with its Dustbuster technology, which enables self-cleaning of the outdoor unit to improve cooling efficiency.
The appliances business of Godrej Engineering Group, on the other hand, is counting on its five-year comprehensive warranty scheme across products including ACs to reassure consumers during their purchase decisions this summer.
Kamal Nandi, business head and executive vice-president, appliances business, Godrej Engineering Group, said the five-year warranty scheme had no hidden costs and was designed to reduce ambiguity in the after-sales service. It also signals confidence in product durability and service infrastructure, which includes over 950 service centres and over 4,000 service experts across India.