April and May account for over 35 per cent of AC sales. Consumer durable makers were worried that it would be a mild summer this year, too, as it had rained in Delhi and parts of western and southern India. In 2008, AC sales were especially affected in North India, from where close to 40 per cent sales are reported. The branded AC market stood at two million units last year, worth around Rs 4,000 crore (Rs 40 billion).
This year, the story promises to be different. Over the past week, AC sales have risen, with demand outdoing supply, says Pradeep Bakshi, vice-president (operations), Voltas.
Blue Star sold around 1,50,000 units of window and split ACs in 2008-09. "Around 35 per cent of our annual sales generally take place in summer. This summer, we anticipate growth of approximately 10-15 per cent over the corresponding period last year," said B Thiagarajan, executive vice-president, Blue Star.
Besides an early monsoon, dealers were worried due to the global financial meltdown, which resulted in subdued spending in the metros in the past six months. "We were hoping to just match last year's sales," said Nilesh Gupta, director, Vijay Sales. Gupta is now smiling as sales are exceeding his expectations.
The slowing economy has also forced companies to rework their inventory management, besides manufacturing and trade credit terms. "We are not granting extended credit period to the trade channel," said Pranay Dhabahi, COO, Haier, adding, "The trade has the option to buy smaller stocks."
Cash flow measures include "keeping the supply chain efficient and in tune with the market demand", according to Carrier India Managing Director Zubin Irani, who is positive the season will be better than last summer.
Dealers have cut inventory. "We have cut by almost 30 per cent. This has also helped us keep payments on track since the credit period by companies has shrunk," said Manav Bhandari, owner of New Delhi-based Happy Air-Condition and Refrigeration Works.
Due to the slowdown, consumers have become more value conscious and are spending largely in the economy segments, buying the one-tonne split ACs priced between Rs 14,000 and Rs 25,000, say dealers. Ajit Joshi, chief executive officer, Croma, says, "Consumer sentiment is a little low overall but has impacted luxury and non-essential products (like apparel, jewellry) more than the industries where people make considered purchases (like in electronics.)"
Consumer durable retailers are witnessing an increase in same-store sales, says Peshwa Acharya, head of marketing and operations at Reliance Digital, which has sales of Rs 30-50 crore (Rs 300-500 million) a month. "During summers, 30 per cent, or Rs 15 crore (Rs 150 million) of our overall sales, are from air conditioners. AC sales will grow 15-30 per cent over last year," he said.
