India’s consumer durables market has been affected because the supply of components used in manufacturing goods ranging from television panels to refrigerators and washing-machines is stuck in Shanghai owing to the Covid-induced lockdown there.
White goods have 25-75 per cent of their components coming from China, with air-conditioners being the most dependent on them with 75 per cent. Consumer durables companies here have stocked up on components, but inventories could start to dry up from mid-May and the immediate fallout of it could be that some models may go out of stock and the situation could become even more severe in June if the lockdown in China persists.
“There are a lot of challenges in Shanghai. Short supplies across categories are surfacing. It is difficult to say how the situation will pan out mid-May onwards, but it could worsen if the lockdown continues into June,” Kamal Nandi, business head and executive vice-president at Godrej Appliances, told Business Standard.
He further added it could take three to four months for the situation to normalise once China lifted lockdown restrictions. That will coincide with the festive season, which begins in September.
Demand for summer products has improved after two years. It had been choked off due to Covid-induced lockdowns impacting sales of summer products like refrigerators and air-conditioners.
Nandi said volumes were a little higher than in the 2019 summer and value-wise sales were up 15-20 per cent due to price increases.
Eric Braganza, president of the Consumer Electronics and Appliances Manufacturers Association (CEAMA), said it was difficult to predict the extent of the impact the lockdown in China would have on consumer durables, and parts of Beijing were also being shut down, which too could hurt the industry.
“June could be bad if the lockdown continues in China. It is difficult to predict the impact right now,” Braganza said.
He said demand for summer products had shot up substantially due to high temperatures across the country and summer came 30 days early this year.
Braganza said a few models could go out of stock due to delays in components coming from China.
Contract manufacturer Dixon Technologies has started witnessing an improvement in inbound shipments but did face a shortage of components in the past two-three weeks.
“The shipments delayed are already in the pipeline,” said Atul Lall, managing director (MD) and vice-chairman, Dixon Technologies.
Super Plastronics, the brand licensee of Kodak, Thomson, Blaupunkt and Westinghouse in India, had stocked up in October-December and January-March.
“We increased our orders from China as we expected some disruption and that has worked for us,” said Avneet Singh Marwah, chief executive officer, Super Plastronics.
Retailer Vijay Sales is yet to see an impact on goods reaching stores.
“We have not witnessed a slowdown in products reaching stores because we had stocked up in anticipation of good summer sales,” said Nilesh Gupta, MD of Vijay Sales.
He also said demand for summer products was extremely strong in March, but not as strong in April.
Gupta added sales of summer goods like air-conditioners and refrigerators were at levels similar to 2019.