Companies struggle to produce to whet appetite for summer-specific products

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The record temperatures sizzling large parts of North and other parts of India has also indicated the onset of a different climate for many companies – that of demand outstripping supply of some products by such a margin that the heat is now on these firms to deliver to customers.

Predictably, the first item on this list is AC machines. Voltas MD Pradeep Bakshi has told The Economic Times that his phone was inundated with messages from dealers clamouring for stocks that have run dry in the face of sky-high demand from suffering consumers. Stories are doing the rounds of Haier working overnight in its Noida factory to put together 2,000 AC machines as soon as the same number of printed circuit boards (PCBs) reached Dadri dry port on the evening of May 28. The mission: to deliver the machines first thing in the morning. Haier’s principal warehouse which can accommodate 50,000 AC machines, is simply empty.

With various brands unable to service the demand, the AC industry has quoted the cumulative loss so far around Rs 3,000 crore – an amount which is 100% more than the amount they estimated in April.

Voltas sold more than 20 lakh AC machines last year. Its MD now says the industry has lost the opportunity to sell almost 10 lakh machines this year since they were not prepared for the demand to surge to this level.

Anil Rai Gupta, MD of Havells which owns Lloyd electronics brand also pointed out that zero inventory is a crisis in this season of peak demand. In Delhi, retail chains such as Vijay Sales and Great Eastern are struggling to deliver ACs in 72 hours.

ACs mean only a partial picture though. Zooming demand and under-preparedness of the companies to meet up to it pervades sectors such as refrigerators, soft drinks, beer, air coolers, fans, ice creams and bottled water.

The report states that data collated in April-May from executives in consumer goods companies such as Dabur, Amul, Bisleri, AB InBev, PepsiCo, Voltas, Lloyd, Haier and Vijay Sales show that categories mentioned above have sold 25-70% more (year-on-year) this summer.

In earlier summers, breweries would operate at about 85% of the capacity to quench thirst during peak summer. But this summer they are reportedly running at full capacity – something they never did earlier. United Breweries managing director Vivek Gupta, however, said on an earnings call recently that dry days imposed by the election could impact demand, and therefore, sales.

Since March several FMCG companies have been running production lines at 100% capacity to cater to the demand.

Bisleri International, the largest maker of packaged drinking water in the country, has recorded double-digit growth in sales to record levels. “There was a bit of a dampener in the south with unseasonal rains but the north has seen a surge in demand, which is not easy to service even with planned supply chain operations. At present, more than demand, it is the fulfilment which is challenging, given that many frontline staff from drivers to sales people report heatwave-related illness,” Bisleri CEO Angelo George told the newspaper.”

Dabur sales head Anshul Gupta said demand for glucose is rising due to the heatwave.

Jayen Mehta, MD of Gujarat Cooperative Milk Marketing Federation revealed that sales are hovering in high double digits across categories. “We had anticipated the demand and to avoid stock-outs, worked aggressively on supply chain, distribution and increased manufacturing plants and expanded capacities in existing ones,” Mehta said.

Incidentally, the southern and eastern states were the first to bear the brunt of the heatwave this year. The weather became really oppressive in the north in the past 15 days or so. Maximum temperatures in the north rose to around 50 degrees Celsius.

Maximum temperature in northwest and central India has remained around 3-6 degrees Celsius above normal but can gradually crawl down by 2-4 degrees in the next five days, India Meteorological Department said on May 30. However, Maharashtra and south peninsular India might witness a rise in temperatures.