As India gears up for soaring temperatures this summer, consumer durables are poised to witness a significant surge in demand, fueling a robust economy. Forecasts by the India Meteorological Department (IMD) indicate above-normal maximum temperatures from April to June, coupled with heightened heatwave days in various regions across the country.
Major players in the fast-moving consumer goods (FMCG) and consumer durables sectors are optimistic about a resurgence in sales following last year's subdued performance due to unseasonal rains. With the mercury rising, essential commodities such as air conditioners, refrigerators, and fans are rapidly disappearing from store shelves, signaling a bustling market landscape.
The financials
Leading the charge is Voltas, a prominent consumer durables company, which reported an impressive 30 percent year-on-year revenue growth in Q3FY24, totaling Rs 2,625.72 crore. The surge in revenue is primarily attributed to a substantial increase in air conditioner sales, with over 2 million units sold in FY24 alone, marking a record high for AC sales in India.
Similarly, Blue Star, another key player in the white goods industry, witnessed a remarkable 25% revenue surge during the same period. Anticipating further growth, the company expects a 25% increase in residential AC sales in Q1FY25, the peak season for such purchases.
According to Blue Star's Managing Director, B Thiagarajan, the Indian commercial refrigeration market is poised to double to Rs 10,000 crore within four years. In a conversation with CNBC-TV18, he emphasised the crucial role of integrated cold chain infrastructure in driving the growth of commercial refrigeration, underscoring Blue Star's aim to maintain its 35% market share in the segment.
Thiagarajan highlighted the significance of the upcoming summer season for the industry, likening it to Diwali in terms of sales. He further expressed optimism about the current season, citing predictions of harsh weather conditions and robust demand. Dealers have reportedly stocked up well in anticipation of heightened demand.
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The growth in the consumer durables sector is largely driven by an aspirational middle class, with significant penetration levels observed in tier 3, 4, and 5 towns. Thiagarajan emphasised the importance of a favorable monsoon outlook, particularly for rural consumption, which significantly influences festival season sales.
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The government's Production Linked Incentive (PLI) scheme for white goods, initiated in November 2021, has played a pivotal role in boosting domestic manufacturing. With 42 companies selected under the scheme, investments totaling Rs 4,614 crore have been made to enhance AC and LED component manufacturing, significantly increasing domestic value addition for air conditioners.
As the summer unfolds, industry experts anticipate sustained growth in the consumer durables sector, propelled by favorable weather conditions and government incentives, heralding a promising trajectory for the industry in the foreseeable future.
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