Senior executives of these companies said the acceleration in scaling up is due to high demand in the past two months exceeding expectations, and to build up inventory, considering localised lockdowns are likely to continue in some areas, affecting plant operations.
India’s nationwide lockdown began on March 25 and was lifted in stages from May onwards, leading to a surge in sales due to pent-up demand. Despite localised shutdowns to curb the spread of Covid-19, the trend seems to be holding up for smartphones and consumer electronics.
LG India, the country’s largest home appliance maker, has equalled last year’s output and is scaling it up by 10-15% for the festive season. Plants are running two shifts and also working Sundays, said Vijay Babu, vice-president, home appliances, LG. “Somewhere, we have to take a risk (of boosting production), but considering sales have been fantastic till now, we are confident,” he said. Sales in July thus far have risen 37% on-year, despite local lockdowns.
Losses may be Recouped
Dixon, a contract manufacturer for Xiaomi, Samsung and Panasonic, said it will expand capacity for washing machines and televisions by up to 40% due to big orders from clients. “The industry is gung-ho about the festive season due to pick-up in rural markets, several companies reversing their pay cuts or even paying bonuses,” said Sunil Vachani, chairman, Dixon.
Vivo is going to start production for the festive season from next month, while Xiaomi and Samsung are also planning a similar build-up, industry executives said. The companies did not respond to queries.
While the industry lost 21-22% of overall revenue during the lockdown months, the rise in demand since then indicates that some of this can be recovered in the festive season, said Panasonic India chief executive Manish Sharma.
While demand outstripped supply for categories such as smartphones and dishwashers, even products like refrigerators, televisions and washing machines have seen sales rising 40-60% since May.
A Realme spokesperson said factories will get back to normal by July-end and the company will be ready to meet demand during the festive season. Until now, most companies have been operating at 50-80% of capacity.
“As supply chains were disrupted due to the pandemic and only limited production capabilities were revamped, it was (initially) challenging for us to meet the full demand in the market,” said the Realme spokesperson.