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Sitting on AC inventory, waiting for lockdown to lift: Carrier Midea India MD

The air conditioner (ACs) industry, which sees a majority of sales in the March to June period, is waiting for the novel coronavirus, or COVID-19, lockdown to be lifted to drive sales and begin servicing. In an interaction with Moneycontrol, Krishan Sachdev, Managing Director, Carrier Midea India, said the company is sitting on AC inventory.

“We have ready stocks (of air conditioners) and our channel partners (distributors) are also stocked up. The company is waiting for the lockdown to lift,” he added.

Carrier Midea India is a joint venture between US-based UTC Climate Control & Security (Carrier brand) and Midea Group of China (Midea brand).

The company has a manufacturing facility in Bawal, Haryana, and a new one in Supa, Maharashtra. Carrier Midea India has exclusive rights to manufacture and sell Carrier and Midea brand air conditioners, Midea brand home appliances and Midea brand commercial ACs in India.

Sachdev said the COVID-19 crisis comes at a time when AC sales are at its peak in the country. India had announced a lockdown from March 25 onwards for 21 days, which has now been extended till May 3.

“About 75 percent of AC sales happen in the first half of the calendar year. Of this, 60 percent of sales occur between March 15 and June 15. The lockdown coincided with the start of this period,” he said.

The AC industry had component shortages from early February due to the COVID-19 outbreak with its epicentre in China. To prevent infection spread, China had ordered a closure of all manufacturing units across its cities. India imports components like air compressors from China.

Sachdev explained that while in February there was a component shortage, the situation improved by March. However, by then, the virus had hit markets like India halting both production and sales.

The Indian room AC industry market is pegged around Rs 12,000 crore (5.5 million units), with more than 20 companies competing in this space.

As far as this year is concerned, Sachdev said the company is not eyeing any revenue growth over previous year but is looking to stay stable.

“We will have to wait till May 3 for sales to open up. But the worry is that by May 15, sales in south and west India will start declining,” he added.

The bigger concern for him is the fact that the company is not being allowed to provide servicing to room ACs.

“This is the hottest part of the year, so servicing requests are also piling up. There is loss of sales, but at least let companies carry out servicing of products,” he added.

The Ministry of Home Affairs had allowed self-employed persons, including technicians and electricians, to begin operations in non-containment zones from April 20. However, Sachdev said the company is wary of letting non-qualified technicians to service/repair their AC brands.

“Ours is a niche product. Regular electricians may not have the requisite expertise or the sufficient spare parts to service or repair our room ACs. We already have a team of 5,000 technicians and are hoping that maintenance and repair services resume soon,” he added.

MHA had also allowed resumption of manufacturing activities in non-containment zones for companies, subject to following safety protocols. Sachdev said the company is awaiting requisite permissions from the district administration in Haryana and Maharashtra to resume production.

―Money Control

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