Unseasonal Rains Dampen Demand for Summer Products, Dealers Cut Stocks

Demand for summer products like ACs and fridges, along with wires and cables, slowed in March due to unseasonal rains. Dealers have cut inventory by 20% and are cautious, but a Yes Securities report still expects double-digit growth this season.

Demand for summer products like air conditioners, refrigerators, air coolers, fans and water purifiers slowed in March due to unseasonal rains earlier this year. Rainfall in January and February, first in the South and then in the North, affected sales during what is usually a key period.

Dealer Caution and Inventory Adjustments

A report by Yes Securities said dealers are being cautious about stocking up for the summer season. Inventory levels have now normalised, with dealers holding about 20 per cent less stock than last year.

"Channel inventory has normalised, while dealers are cautious in building up inventory for the upcoming summer season. Dealers have cut down their inventory by 20% compared to the previous year. On wires and cables front volumes have taken a hit in the month of March as dealers have started to de-stock after aggressively stocking in month of January and early February," the report stated.

The wires and cables segment also saw weaker demand in March. After heavy stocking in January and early February, dealers began reducing inventory. Demand from the construction sector has slowed, as buyers are delaying purchases in the hope of lower prices. While enquiries continue, they are not turning into confirmed orders.

"Dealers after aggressively overstocking in month of January and early February have started to de-stock in month of March as they are waiting for prices to cool off before placing new orders... Moreover, enquiries are not translating into firm orders, resulting in lower offtake from the channel," the report noted.

Pricing and Competitive Landscape

On pricing, larger companies such as Polycab and KEI Industries raised prices by 3-4 per cent from March 21. Smaller players increased prices by around 10 per cent. This has narrowed the price gap between brands, which could benefit bigger companies by helping them gain market share.

Segment-Wise Performance

In the fan segment, sales grew modestly, mainly driven by ceiling fans. There is a clear shift toward energy-efficient BLDC fans, which made up over 30 per cent of total sales in March. However, the lighting segment remained weak due to slower project execution in both consumer and business markets.

Future Outlook and Growth Projections

However, despite the slowdown, the Yes Securities report expects summer products to deliver double-digit revenue growth with high single-digit to low double-digit volume growth this season. Supported by a favourable base and approximately 6-7 per cent pricing growth, this outlook remains intact despite a temporary moderation in demand observed during March due to erratic weather conditions. (ANI)

(Except for the headline, this story has not been edited by Asianet Newsable English staff and is published from a syndicated feed.)