Delayed summer silver lining for cooling product makers amid coronavirus lockdown: CEAMA

Delayed summer is proving to be a silver lining for the consumer durables and appliances industry after a washout March and April – key months for the sale of cooling products such as air conditioners, according to an industry body.

The ongoing summer season is a crucial period for the industry and February to June period contributes to around 60 per cent of the total turnover of the industry, according to Consumer Electronics and Appliances Manufacturers Association (CEAMA).

“Due to the current lockdown and dampened consumer sentiments, the industry has seen a drop of up to 55 per cent in sales in March 2020. As the lockdown is extended to the mid of April we are expecting a similar impact on sales in April as well,” said CEAMA President Kamal Nandi.

Moreover, March and April, the months impacted by the ongoing lockdown, contribute to 12 per cent each in sales turnover to the industry due to the sale of high value cooling products.

“The only silver lining is that the summer season is delayed this year. Temperatures are expected to increase in the coming days,” he said.

However, he also added that there were concerns over the overall economic impact due to the uncertainty about the lockdown and the lingering impact on consumers stepping out unless critical.

Over the estimated impact on revenue, CEAMA said it could not be measured as “manufacturers are not sure when situations will return to normalcy”.

CEAMA is also studying the impact seen in other markets as such as China, but it said “India may behave very differently and hence it is difficult to predict”.

On the recovery of the sector, Nandi said it may start from the end of Q1 (April-June) to as late as the year end, depending on the way lockdown is lifted.

“On part of the industry, companies will look at using all possible levers to get into action and stimulate consumer demand once lockdown is lifted,” he said.

It has also asked the government for relief measures such as postponement of loan repayments at least up to June, 50 per cent reduction of interest rate on active and new loans, deferment of GST payment by 90 days for the next six months and pegging GST at 50 per cent for the rest of the year.

CEAMA has also asked for “delaying the reinstatement of Customs Duty on Open Cells (TV panels) to 5 per cent, waiving off various custom charges on select cases and easy processes to clear consignment at ports are recommended as well.”

Further, it has asked for reduction of collection target for e-waste and plastic waste for the financial year by 50 per cent.

Earlier, in February and March, the Indian appliances and consumer electronics industry was battling for components as it is largely dependent on China for the sourcing of components and some of the finished goods.

According to a joint report by CEAMA and Frost & Sullivan, the industry had a total market size of Rs 76,400 crore in 2018-19.