AC makers get ready for boom after Holi

Rising temperatures have pushed up sales by up to 25% for major manufacturers

After a surge in sales in the south and west, air conditioner (AC) makers are preparing for a hot summer in the north.

Rising temperatures in Maharashtra, Tamil Nadu, Kerala and Telangana pushed up sales by up to 25 per cent for major manufacturers such as Daikin, Blue Star, Carrier-Midea and Voltas between January and mid-March. This has given hope to the sector, hit by a mild summer last year.

According to B Thiagarajan, president of Blue Star’s AC and refrigeration business, they expect 25 per cent growth in 2016-17. The south accounts for 29 per cent of sales, the north for 37 per cent, the west for 22 per cent and the east follows with 12 per cent.

“This year, the industry has witnessed an early onslaught of summers, right from the middle of February. While the entire country witnessed a relatively warm February, in March we see a lot of traction in South India. We see the momentum continuing with a buoyant April and May”, Pradeep Bakshi, president & chief operating officer, Voltas Limited said.

According to P Vijay babu, business head (AC), LG India, they are expecting a double digit growth from the northern region. LG is the second largest AC maker in the country after Voltas. Other major players like Daikin, Carrier-Midea, Videocon and Godrej too are expecting sales to grow by 15 to 30 percent this year.

Daikin, Carrier-Midea, Videocon and Godrej expect sales to grow by 15-30 per cent. “Dealers have been demanding products such as ACs. Typically, February-March is when we place the products in the market. We’ve had to rush that process to meet demand this year,” said Anirudh Dhoot, director, Videocon Industries.

AC sales are driven by higher temperature and intermittent rain in the north this month can play spoilsport. Industry executives are betting on a weather prediction of above-normal heat after Holi.

The Rs 10,000-crore industry grew by 10 per cent last year, compared to the over-20 per cent it had expected. The summer season, 50-60 per cent of yearly sales, saw volume growth in single digits.

Sale of ACs in India is much lower than in major Asian economies such as Japan and China, at four million units a year. Its penetration in Indian households remains low at three per cent, compared to an average of 60 per cent among major economies, an EY report stated. “All signs seem to suggest that the summer this year will be better than last year. Generally, summer (comes) in the first week of March; this year, it kicked in earlier,” said Kamal Nandi, executive vice-president, Godrej Appliances.
KEEPING IT COOL

• AC sales surge early in February, March 2016 in south & west India due to higher temperatures
  

 

Last year 4 million ACs sold, but penetration remains low at 3% compared to global average of 60%
 

Industry grew 10%, less than 20% growth projected
 

Milder summer played spoilsport but festive season saved the day for the industry
 

Sales expected to clock Rs 23,100 crore by 2020 from Rs 10,000 crore in 2015

Source: Industry