White Goods Industry Hits A Breaker

Between April and June this year, 45,600 air-conditioners were sold as compared with 46,600 during the corresponding period last year. Similarly, refrigerator sales were flat at last year's level of 5.63 lakh units.

An industry that projected a 25-per cent growth rate now faces the prospects of negative growth by the end of the current financial year, says an industry expert.

His fears are not misplaced. The white goods industry is not operating at full capacity. For instance, against the installed capacity of 2.90 lakh units of ACs only 1.62 lakh units were sold in 1995-96. Ditto for refrigerators. Against an installed capacity of 32 lakh units, the sales figure stood at 21 lakh units.

 

Add to this the new capacities being generated by the entry of MNCs. Samsung and Westinghouse are planning capacities of 3-5 lakh units in refrigerators, respectively. This additional capacity is bound to compound the problems for the domestic manufacturers who had expected to utilise their capacities during the current year. But there are exceptions like the Delhi-based AC manufacturer Carrier Aircon. According to its general manager R S S N Raju: "We have managed a 8-10 per cent growth during the first five months of the current financial year." Raju agrees that industrial orders for air-conditioners are not up to expectations even for his company. Even home orders are not growing at the pace expected. The average industry-to-home sales ratio of works out to 60:40.

A leading AC manufacturer confided that "sales have been dismal in July and August and though official industry figures are not available, it definitely shows a negative growth of 10 per cent". The reason for poor offtake is the resistance from cnnsumers because of the liquidity crunch. Consumer finance somehow has not been up to the mark, according to industry sources.

Voltas, which has a high installed capacity for refrigerators exceeding 6 lakh units, too, stated that it was using almost 60 per cent of existing capacity. The consensus in the industry is the MNCs would be the players of the future with their high entry budgets and their huge capacities.