Rising summer heat lifts spirit of AC makers

Chennai: After a bad summer last year, cooling appliances are looking forward for a double-digit growth this time. Summer sales of air-conditioners and refrigerators have already picked up in south India.

With the temperature rising, AC and refrigerator sales have started registering double-digit growth in south Indian states of Kerala, Tamil Nadu, Karnataka and Andhra Pradesh. Going by the forecasts, a similar trend is expected in other regions of the country as well.

“Last summer, air-conditioners de-grew by 5 to 7 per cent and refrigerators witnessed a flat growth of around 2 per cent. Last year, the summer had set in late and we had intermittent rains during the three months of the season. This time, as per the forecasts, no disruptions are likely during the summer,” said Kamal Nandi, Business Head and EVP – Godrej Appliances and President of industry lobby CEAMA.

Nandi expects refrigerator sales to grow by 10 to 12 per cent and ACs by 12 to 15 per cent. Sales in the southern markets have already clocked 10 to 15 per cent growth.

Another appliances maker Bluestar expects 20 to 25 per cent growth this summer, which should help it clock double-digit annual growth. “Though it is difficult to predict the entire summer now, it looks like we will have a better season this time. Summer sales will help the overall yearly sales grow by 10 to 15 per cent,” said B Thiagarajan, Joint Managing Director of Bluestar. Summer accounts for almost 40 per cent of the yearly sales of consumer appliances.

According to him, the commodity prices and currency exchange rates too are favourable this time. Though ACs are taxed at a GST rate of 28 per cent, he finds that it is not detrimental to sales as excise and state sales tax were closer to this level under the earlier regime.

‘The increasing demand for ACs in Tier III and IV cities also is an encouraging factor. Inverter ACs, which hitherto was a metro phenomenon, have found a market in Tier III and IV cities as consumers have become energy conscious,” said Nandi. Energy efficient inverter ACs already account for half of the market and this year this share may increase to 60 per cent.

Further, consumers are likely to prefer three-star ACs over five-star ACs this time as prices have gone up by Rs 4,000-Rs 5,000 per unit due to the new energy efficiency rating. The five-star AC demand is expected to shrink.