Consumer durable companies will again start to face a supply issue of components as China extends lockdown due to its zero Covid strategy.
This will impact the flow of finished products into the Indian market, unlike last year, this impact will be felt post Diwali.
While supply chain issues have been a problem since the start of the pandemic, China’s zero Covid strategy has also posed another risk for consumer durable companies.
White goods have 25-75 per cent of their components coming from China, with air-conditioners being the most dependent on them with 75 per cent.
Companies have stocked up on components ahead of the festive season but the shortage will still hit the market post the festive season and impact summer production of consumer durables if China continues its zero Covid strategy.
"Though China’s zero-Covid policy has impacted supply chains the shortage of components will be felt post Diwali,...", Avneet Marwah, CEO of Super Plastronics said.
The company which is the brand licensee of Kodak, Thomson, Blaupunkt and Westinghouse in India has already procured components that are enough to help it tide over the festival period.
Last year, there was an impact on product availability due to supply chain constraints which was a problem for the industry.
Kamal Nandi, business head and executive vice president at Godrej Appliances, part of Godrej & Boyce said, “Our festive month of Sep is fully covered, and October is partially covered.”
Blue Star, which has tweaked its procurement strategy due to the supply chain issues and China's lockdowns, has also procured stocks till December.
“The question is procurement of components for the summer months for which procurement and production starts in January,” B Thiagarajan, managing director of Blue Star.
He explained that the real worry is the summer months as supplies are coming in but they are taking time.
Earlier the company would procure with two months of inventory but now they order in bulk for the next six months since the start of the pandemic.
India has demand, but supply chain has been a constant issue.
“While supply chain problems persist, localised lockdowns are aggravating the issue,” Thiagarajan said.
China’s lockdown in May this year also hurt the consumer durables industry as the summer demand was strong however supply of components were stuck.
Dixon Technologies has also covered itself by ordering its components in bulk.
“There are some localised challenges in some provinces.
"We have planned our inventories well in advance and are covered,” Atul Lall, managing director of Dixon Technologies said.
