After the recent unseasonal rains in many parts of the country, air conditioner (AC) manufacturing companies have become alert. Companies fear that this may affect the demand for air conditioners in the beginning of summer, when this is the most important time for their sales. The concern of the industry is not limited to just the weather. Due to the ongoing tension in West Asia, the prices of raw materials, especially plastic, are increasing. Besides, the supply of LPG gas has also reduced, which is affecting the production. Companies say that due to plastic becoming expensive, prices of large home appliances like washing machines and refrigerators may increase by 10 to 12 percent. Usually, the heat starts increasing in the month of March and the demand for cooling products increases, but this time the companies are confused due to the change in the weather. However, they are hopeful that the temperature will rise in April and demand will also improve.
Air conditioners may become costlier by 10 percent
Kamal Nandi, head of the appliance business of Godrej Enterprises Group, said that there are signs of temperature rise in Delhi and North India after next week. He said that it is too early to say anything about the impact on sales. Nandy said companies have already raised prices this year, when new energy labeling rules came into effect in January. Now due to increase in raw material and transportation costs, prices may be increased again in April. Godrej has indicated a five to 10 percent increase in AC prices from April 1. Higher India Chairman N. S. Satish said that the supply of LPG gas to the factories has been reduced. If this situation continues, production may have to be reduced by 20 to 30 percent before the busy summer season.
Reduction in LPG supply to companies
To give priority to domestic cooking gas, the government has reduced the LPG supply to industries from 80 percent to 65 percent of their average consumption. This is affecting the process used in air conditioner manufacturing. Satish also said that due to plastic becoming expensive, the costs of the companies are increasing and this will affect the customers. He told that about 20 percent of the total cost of a washing machine is plastic, hence it has become necessary to increase the prices. Experts believe that if prices increase, customers may buy cheaper or lower capacity products instead of expensive models.