The manufacturers of air cooling products such as fans, air coolers and air conditioners are likely to face a second consecutive year of lower sales volume, given the possibility of an extended winter. According to the Indian Meteorology Department, winter is expected to linger a little longer than usual due to western disturbance — a low pressure in the Atlantic Ocean and Europe that results in a cold wave. The summer season for cooling products, which begins in March and ends in May, accounts for nearly half of the total sales volumes during a year. Hence, any change in weather conditions impacts the performance of companies in this business. Voltas has the highest share of revenue from cooling products at around 50 per cent, followed by Crompton at 46 per cent and Havells at 25 per cent, according to brokerage CLSA.

Voltas is the market leader in air conditioners while Crompton dominates the fan segment. The expected slippage in volume growth in the fourth quarter may aggravate the hit for these companies. To make matters worse, the inventory levels are elevated at 2-2.5 months compared with an average inventory of 1-1.5 months due to weaker sales in the summer of 2018. It is the highest for air conditioners. The growth of the air-conditioning segment, which is the most under-penetrated cooling product, is expected to drop to low single digit in FY19 against 13 per cent average growth in the past three fiscals.

(Source: The Economic Times, February 22, 2019)