The ongoing heat wave has led to record air conditioner sales of six million units in the April-June period, reflecting a year-on-year (y-o-y) growth of 50%, according to the Consumer Electronics and Appliances Manufacturers Association (CEAMA). However, there is another side to the story.
Companies like Godrej Appliances, Haier and Super Plastronics, which produces Thomson air conditioners and air coolers, said there has been a potential loss in business of about one million units in the June quarter due to a demand-supply mismatch caused by the “unprecedented heatwave”.
“The domestic AC market could have reached seven million units in sales in the June quarter this year, but inventory shortfalls and component shortages have resulted in a sales loss of about 17-20%,” said Kamal Nandi, business head and executive vice-president of Godrej Appliances.
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Air conditioners are typically assembled using parts sourced both domestically and from international markets like China. Essential raw materials, such as copper and components like printed circuit boards and outdoor units, are directly imported from China, according to market experts.
Suppliers, says Satish NS, president, Haier Appliances India, require a 90-day lead time to provide components, implying that orders to them have to go out by November-December to catch the summer cycle of March-June.
“No one anticipated this kind of heat wave this year. It has been unprecedented. First, the south markets saw a sharp rise in demand, then the east market began firing. Now, it is the north and west markets, where heat-wave conditions prevail. We’ve had to airlift components to meet demand during the peak summer months of May-June. Even then, there has been a shortfall in terms of demand and supply,” Satish said.
Avneet Singh Marwah, director & CEO, Super Plastronics, said the company is facing a 30% backlog in terms of orders. “We are doing our best in terms of meeting the order backlog. But suppliers are finding it difficult to provide components. Most expected a normal business cycle. But demand has been strong due to the heat wave,” Marwah said.
The Indian Meteorological Department (IMD) has warned that severe heatwave conditions will persist in the north and west despite rainfall in select states. It has issued a red alert in Delhi, Punjab, and other parts of north and central India as temperatures soar above 45-46 degrees Celsius. Even Mumbai has seen deficient rains in June so far, with temperatures remaining high.
From: financialexpress
Financial News
