Appliance Firms Staring At Brief Production Halt Amid Lockdown

A combination of localised lockdowns, closure of non-essential retail stores, and challenges emerging from low industrial oxygen supplies has forced home appliance makers to temporarily halt manufacturing activity.

Japanese major Panasonic will shut its Jhajjar plant in Haryana for a week beginning Monday, as demand suffers on account of containment measures.

“There was a positive momentum in the market between January and March, as coronavirus cases were low and people were stepping out to buy. As the cases picked up in April, localised lockdowns have grown, hurting demand. At the same time, the safety of our people matters. We have, therefore, taken the decision to temporarily halt operations at our Jhajjar plant. This is for a week,” Manish Sharma, president and chief executive officer of Panasonic India and South Asia, said.

Panasonic will join a few companies in the Noida-Greater Noida belt in neighbouring Uttar Pradesh, who’ve briefly halted their manufacturing operations due to demand disruption. Companies such as LG, Samsung, Oppo, Vivo, Daiwa and Superplastronics are located there in this area.

LG said its Greater Noida plant was operational, though staff at the factory visited by Business Standard said that operations were not on.

Close to 60 per cent of India’s appliance and consumer electronics including smartphones and TV sets are manufactured in this belt.

Experts say that companies are also facing an acute migrant crisis and are having to contend with depleting supply of industry oxygen, required for welding and brazing operations.

“Compressor-based products such as refrigerators, air conditioners and freezers require industrial oxygen for welding and brazing. These activities will suffer, impacting production. Most home-appliance plants across the country are carrying just about 5-7 day supplies of industrial oxygen. They may have to shut because it will be difficult for them to carry out production,” Kamal Nandi, business head and executive vice-president, Godrej Appliances, said.

Nandi is also the president of the Consumer Electronics and Appliances Manufacturers Association (CEAMA), an apex body of durable companies in the country. The body has been monitoring the situation closely, since the summer season constitutes over a third of industry sales.

Players are already redrawing their plans, pushing key launches into forthcoming quarters as they struggle to tide over the June quarter. April contributes close to 15 per cent in terms of sales in the June quarter, in part because of harvest festivals that are celebrated across the country around April 13-14.

This year, the holy period of Ramzan also began on April 14. Ram Navami, a big festival for Hindus, fell on April 21. But home appliance makers have been barely able to take advantage of any of these occasions, since lockdown restrictions have been stringent across the country. India recorded over 3 lakh coronavirus cases for the third straight day on Friday.

Kanwal Jeet Jawa, managing director and chief executive officer, Daikin India, says industry recovery will take a hit. "We were just coming out of a tough phase, triggered by the first wave of the Covid-19 pandemic. At the same time, challenges such as price hikes due to commodity inflation were there. Now, these localised lockdowns and challenges arising out of low oxygen supplies. The industry will see a setback on account of this," he says.

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