AC makers LG, Voltas To Increase production By 20% To Meet Summer Demands

With warm temperature in west and south pushing demand by over 15% in February and Met office forecasting a harsh summer this year, air-conditioner makers such as Voltas, LG, Daikin and Godrej are expanding their production by up to 20%.

The white goods industry, which has been battling poor sales for over 6 months, expects air-conditioner sales to grow almost 20% this summer based on early sales trend and forecast by India Meteorological Department (IMD) of average temperature being above normal by more than one degree Celsius in most of the country from March to May.

He said, “Companies are now building up additional inventory pipeline as they were earlier expecting 10-12% sales growth. “We are ramping up production by almost 20% since we expect much higher sales growth now than what was initially expected,” said Tata-owned Voltas managing director Pradeep Bakshi. “There is also a lot of pent-up demand of last year. We are gearing up our production to stock up.”

Godrej Appliances business head Kamal Nandi said the IMD projection has been the biggest positive development for the industry in the absence of any other indicator supporting growth. “Night temperature in west and south is 25-degrees plus since mid-February, pushing sales. We would now run our plant in peak capacity.”

The white goods industry has been affected by consumers holding back discretionary spending whereby several categories like television, refrigerators and washing machines reporting flat to low single digit growth since the introduction of GST.

Daikin Air-Conditioning India CEO KJ Jawa said the company has ramped up production with target of growing faster than the market.

He said, “We have recently started production at our second plant which has increased the annual capacity from 7 lakh units to 1.5 million units. The target is to touch Rs 4,000 crore sales this year as compared to Rs 3,250 crore of last year.”

AC makers have also moved to a common energy efficiency rating, Indian Seasonal Energy Efficiency Ratio (ISEER ratings) as mandated by the government for both inverter compressor models and lower-priced fixed speed AC models. The companies expect this will boost sales since consumers can compare the models on an even platform and realise higher savings on their electricity bills.