Rising mercury to fire up AC sales, industry expects 8% growth

Despite a delayed summer and irregular weather conditions in certain regions, the air conditioner industry in India is expecting to grow by 8% this fiscal.

Thanks to sudden spurt in mercury levels in central, western and southern regions in the country, month-on-month sales have picked up for most manufacturers. 

Industry officials believe that they are yet to gain momentum. 

Manish Sharma, president - Consumer Electronics and Appliances Manufacturers Association (CEAMA) and managing director, Panasonic India and South Asia said growth in April was not at par.

“This was mainly due to sudden rains received in the southern and western regions. However, the industry is hopeful of a recovery in the market and achieving the projected growth of 8%, which is 3.7 million units in 2015-16,” said Sharma, adding that Panasonic will be looking to capture a market share of 12% with 20% increase in sales over last year.

In January-February 2014, the air conditioner sales fell 10% mainly due to demand slowdown and increase in prices by 15-20% as star rating regime became stricter. 

However, with prices remaining more or less stable coupled with pent-up demand has led to increase in sales of air conditioners in the current calendar year so far.

Sanjeev Bakshi, country head – AC, Videocon Industries, said the first quarter of the year was good as summer kicked in early in the southern region and the season has finally started settling across the country. 

“The industry saw between 6% and 7% growth (like-to-like) in the January to April period and this is volume. On the pricing side, there would have been another 4% to 5% growth for sure. So overall, the industry would have clocked in an 11% to 12% growth already so far in the year,” said Bakshi. 

In fact, a delayed summer has brought further optimism and the fraternity is confident that sales will continue in the May to July period contributing around 25% to 30% to full year's business. Quoting GFK-Nielsen figures, Anup Bhargava, product group head – air conditioners, Godrej Appliances, said the AC market has (on an average) grown by 25% in the period between January and March this year.

“We will know the figures for April in a week or so. And with temperature soaring in West and South followed by North and East in the last over a week or so, sales will start to pick up further across the country. I am quite sure that sales will continue to grow at the same rate (25% to 30%) in May, June and July as well,” said Bhargava.

Air conditioner sales typically are the highest in the months of March and April. However, certain parts of north India witnessed irregularities including hail-storm and abnormal rains, which impacted sales. Elaborating on the scenario there, Pradeep Bakshi, president and COO - unitary products business group (UPBG) & mining & construction equipment division (MCED), Voltas Ltd, said, “The situation in north India, which is among the largest contributor to AC sales, is such that people haven't felt the need of using ACs or coolers yet. Sales will pick up once the temperature starts crossing 40 degrees.”

Voltas, which is the AC market leader with 20.8% market share (in 2014-15), has now also forayed into the air coolers category with its Voltas Fresh-Air Coolers. The Rs 3,000 crore air cooler industry in India is primarily dominated by listed player Symphony in addition to Kenstar and a bunch of other unorganised players.

In terms of markets, Bakshi said that the western region has been performing very well followed by southern region. “The northern and eastern regions are yet to pick up, which is likely to happen soon,” he said.