War Impact Dampens AC Demand

At the onset of summer, rising temperatures typically drive strong demand for air conditioners. However, unseasonal rains across several parts of the country are likely to negatively impact early demand this year, prompting AC manufacturers to remain cautious. At the same time, the ongoing conflict in West Asia has led to an increase in the cost of raw materials such as plastic, while reduced LPG supply has further raised production costs. The recent price hikes announced by companies have also created concern within the industry. According to industry estimates, rising plastic prices could push up the cost of large home appliances, such as washing machines, by 10–12 percent.

Usually, demand for cooling products increases during this period, but the current abnormal weather conditions have unsettled manufacturers. Despite this, industry executives remain optimistic that temperatures will rise in the coming month. Kamal Nandi, Business Head at Godrej Enterprises, stated that temperatures are expected to increase in Delhi and northern India after the coming week and conditions may normalize next month. He also indicated that prices of Godrej products are likely to increase by 5–10 percent from the 1st of next month, which could impact demand.

Meanwhile, the reduced supply of LPG has emerged as another major challenge for the industry. N.S. Satish, President of Haier India, warned that if the situation continues, production could be cut by 20–30 percent even before the peak season begins. B. Thyagarajan, Managing Director of Blue Star, noted that along with plastic, the prices of other raw materials are also rising. He emphasized that the industry is already operating on thin margins and the additional burden will ultimately be passed on to consumers. Industry experts further cautioned that if the conflict does not subside by March, expectations for strong summer demand may decline significantly.