Companies feel the heat of an unusual summer; demand drops for coal, ACs

Unseasonal rain, high number of heatwave days upend business cycle of several sectors

It has been an unusual summer in India with conflicting weather patterns prevailing in different parts of the country, with variegated impacts on business.

While the North had unseasonal rain, the East and South sweltered with a historically high number of “heatwave” days. But apart from the weather vagaries, these erratic events have upended the business cycle of several sectors, mainly 

agriculture, beverages, and consumer durables.
 

Even the sectors of power generation and coal mining have had to re-work their plans because the demand cycle changed in several parts of the country.
 

With the highest impact being on agricultural produce, the prices of several summer staples have shot up. Similarly, for the white-goods sector, the summer has been underwhelming, as against the predictions of record heat.
 

Demand drops for coal, colas and ACs
 

Consumer durables companies and beverages firms, which get most of their sales in summer, took a hit as temperatures dropped due to unseasonal rain. Sales of beverages in value were down 27.6 per cent in the April-June quarter, according to the data by retail intelligence firm Bizom. PepsiCo reported low single-digit growth in the second quarter ended June 17 in the country.
 

Godrej Appliances had earlier said it cut production in June due to an inventory pile-up due to weak demand.
 

Vijay Sales told Business Standard that refrigerators and air-conditioners, which typically fly off the shelf in summer months, had witnessed a drop in sales by at least 15 per cent.
 

Nilesh Gupta, managing director, Vijay Sales, said there was a pickup in sales in May and in June owing to the late arrival of the monsoon.
 

The Union power ministry had anticipated record-high demand from April to June and had prepared in advance, especially with regard to coal supply and import. On the domestic front, output by Coal India touched a record high in May and reached 117 million tonnes (MT). Though India did touch briefly the record high power demand of 220 Gw, it did not last long.
 

As demand waned, there were reports of imported coal shipments lying idle at ports. Power demand in high-consumption northern states fell, while the East and South continued their high demand streak. As on date, the coal stock position at power units is a healthy 13 days. As power units had to fire up in April and May with the early onset of summer, the cycle of annual maintenance during these months has been pushed by NTPC, said an executive. The company prepared to fire on all engines in June but unseasonal rain played a dampener. Hydro units, whose peak supply season starts now, are shut in Uttarakhand and Himachal Pradesh after heavy rain and bludgeoning river dams caused havoc in the hills.
 

Milk market turns cold, vegetable prices hot up

Western disturbances, followed by other unanticipated weather patterns, caused hailstorm and rain, which kept the climate relatively cool in the summer months.
 

Cooler weather meant demand for milk products and value-added items such as buttermilk and ice-creams did not show the exponential rise it usually does during summer months. The lean season for milk, which usually starts in March with the advent of summer and ends in October with onset of winter, never came this year.
 

For the agri produce sector, the delayed monsoon in key agriculture states of Karnataka, Telangana, Maharashtra, Bihar and Andhra Pradesh has pulled down acreage under major pulses and cereals. 

In the case of rice, paddy acreage is down in Bihar and Chhattisgarh. The Central government has started holding discussions with the administration in Bihar and Telangana about contingency measures.
 

Tomato cultivation was affected by the heatwave in early June and pest attacks to the standing crop in Karnataka, which is among the major producing states. This led to a sudden drop in production and a price jump.
 

A major part of production is concentrated in Madhya Pradesh, Andhra Pradesh, Karnataka and Gujarat, which together comprise almost 48 per cent of annual production. All these states suffered heatwaves.
 

Excess rain in July in North India has pushed up the prices of other vegetables such as chillies, coriander, ginger, capsicum, and brinjal as transportation challenges emerge with rural areas and fields facing deluge.
 

Anil Malhotra, former member of Azadpur APMC and chairman of the Vegetable Traders Association, told Business Standard recently most of the standing vegetable crops in Delhi and its adjoining areas were submerged in water, which has pushed up prices.