Voltas expects 25% rise in AC sales as early summer boosts demand

Voltas projects 25% AC sales growth this summer, launches AI-powered units, raises prices amid higher commodity costs and new BEE norms, with strong demand from tier II-III cities

Consumer durables maker Voltas expects to record 25 per cent growth in the room air conditioner (RAC) category in the upcoming summer season, as weather conditions become increasingly favourable to the sale of cooling products.

 

The company, which has six manufacturing facilities, also announced the launch of a new AI-powered AC line for a growing cohort of aspirational consumers. These units can maintain ambient cooling in high temperatures of up to 55 degrees Celsius, developed especially for the north Indian regions, said the Tata company. 

 

“India has as many as 100 million affluent consumers and over 250 million in the neo-middle class. We want to have a full stack of offerings catering across consumer categories,” Mukundan Menon, managing director of Voltas Limited, told Business Standard.

 

However, Tier-II and -III cities continue to be the primary drivers of demand for the company, with almost 85 per cent first time buyers emerging from these cities.

 

With a new manufacturing plant inaugurated in Chennai earlier this year adding 100,000 units, the company can ramp up production to two million, if needed.

 

“We sold over 2.6 million AC units in the last financial year and hope to have a strong season this year with 25 per cent growth, that will hopefully take us close to the three million figure,” said Jayant Balan, head of the RAC business.

 

The company, meanwhile, has raised prices for customers due to increasing commodity prices, the depreciating rupee, and the change in energy efficiency ratings — partially offsetting the impact of goods and services tax (GST) rate cuts.

 

AC prices are set to go up by 5-15 per cent. 

 

“Prices of copper have risen almost 25 per cent and aluminium prices, too, are at a lifetime high. With the new BEE ratings now in effect, the new units are now using more raw material. This effectively takes up their cost — some of which we have had to pass on to the customer,” Balan added.

 

The company expects the inventory pile-up to be diluted in the coming three weeks, as some customers continue to choose the older manufactured units.

 

Its refrigeration segment has experienced over 50 per cent growth in the last two-three years, now nearing a 10 per cent market share.