AC business

Air conditioner, refrigerator makers increase production to full capacity

Manufacturers of air conditioners and refrigerators have increased production to full capacity from 60-70% till two weeks ago amid a surge in demand triggered by the heatwave in several parts of the country and pent-up demand of the last two summers, which were impacted by the Covid-19-induced lockdowns.

Companies such as Voltas, Haier, Godrej Appliances and Lloyd said sales of cooling appliances grew up to 15% in March as compared to 2019, surpassing industry expectations and necessitating an increase in production.

“There has been a spurt in demand in the last ten days after two washed out summers. We are ramping up our production due to the sudden surge,” said Voltas managing director Pradeep Bakshi.

He said while the company is prepared with stock, several smaller brands have already exhausted their inventory. Post Diwali, the entire industry witnessed de-growth, he said.

Haier India president Satish NS said sales are booming in northern, western and central parts of the country due to the heat wave.

“Despite the inflation, consumers are buying cooling products using consumer finance since these have become a necessity. If this kind of demand continues for another 30-35 days, almost every brand will run out of inventory,” he said.

The India Meteorological Department said on Thursday that the heatwave is likely to continue over north-western, central and western India for the next four-five days, with maximum temperatures 4-8 degree Celsius higher than normal in several parts of the country.

The industry, however, is fearing that the lockdown in several parts of China due to the Covid-19 surge might hit production in April-end or May since supplies of components such as compressors, electronic controllers, printed circuit boards, copper and aluminium coils have yet to normalise.

Lloyd sales head Rajesh Rathi said there is pressure on certain models due to good sales, but companies with their own manufacturing units in the country and supply chain will benefit.

Godrej Appliances business head Kamal Nandi said mass segment cooling products, which hitherto were under stress, have also picked up and demand is likely to be stronger in April due to the marriage season as well. “We will try to run peak production till May, but we fear there will be a shortage in May since it is difficult to further scale up due to supply chain disruptions,” he said.

Prices of cooling appliances like air conditioners, refrigerators and air coolers have increased 10-15% in the past two years due to increase in commodity and component prices by 30-35%. While companies have been absorbing a large share of the input cost increase, executives said there will be another round of price hike in the April-June quarter.

“There has been a further increase in input cost in the last few weeks and a price hike is inevitable. Companies will do it in the June quarter depending on the demand-supply situation,” said Nandi.