The domestic consumer durables industry is going through a double whammy — on the one hand it is whacked by slack demand, while on the other, it is having a tough time dealing with component shortages and higher costs due to the coronavirus attack in China.
While some suppliers informed durable players that several Chinese factories may resume operations by early next week, the industry is still in a wait-and-watch mode.
Eric Braganza, President, Haier India, said, “While there is lack of clarity, there is information that the factories are expected to resume manufacturing by February 17. If manufacturing begins by next week, many companies will be able to tide over March. However, it all depends on the procurement strategy of each company, as some players may begin facing production constraints from this month itself.”
Players in categories such as seasonal cooling products, especially air-conditioners, besides electronics products such as LED TVs, rely heavily on Chinese component makers for import of crucial components such as compressors and panels.
Kamal Nandi, President, CEAMA, and Business Head & Executive Vice-President, Godrej Appliances, said, “We are hearing from some suppliers that factories may begin work by early next week. If that happens, component shipments may begin reaching the country only by second half of March. However, if the shutdown gets extended till the month end, then the shipments will reach India by first half of April.”
He added, “Most AC makers, having announced their new product ranges in January, now face the challenges of supplying these products in the peak demand season as they rely heavily on import of compressors.”
Players may need to plan for production cuts as well as postpone new launches.
Avneet Singh Marwah, CEO, Super Plastronics Pvt Ltd, added, “Situation remains challenging as it is not clear whether manufacturing in Chinese factories will begin from next week or will it get further delayed. Consumer durable companies typically stock up on components only for 20-30 days.”