COVID-19 forces companies to cut production

May 8, 2020 written by

According to a few executives, companies in most of the sectors such as apparels, shoes, refrigerators, air-conditioners and smartphones are cutting manufacturing orders as well as sourcing of components for this year’s festive season by up to 40 per cent year on year as they expect much of current stock to remain unsold till then.

The executives said that production cuts will be most in premium product portfolio as companies expect consumers to curb discretionary spending as the impact of the COVID-19 pandemic and the extended nationwide lockdown to contain it, has affected all segments of the economy including household incomes.

J Suresh, CEO, Arvind Fashions said, “We have lost three months of active trading due to the lockdown, considering June will also be partial sales, and hence we are cutting order book.”

“We won’t be making any order for autumn while for winter season it will be 60 per cent of the normal,” he added.

Abhishek Ganguly, MD, Puma India said that the brand will shift some production and launches beyond the festive season whereas Rishab Soni, Managing Director, SSIPL Group, a contract manufacturer for sportswear brand such as Puma, Asics, Lotto and Power, expects its orders to be cut or postponed by 30-40 per cent as most retail businesses are likely to see that much drop in their revenue.

Electronics brands also expect slowdown in their sales due to the lockdown. According to market tracker IDC India, the situation will further downgrade India’s smartphone sales forecast for this calendar from its earlier projection of 135 million against 150 million units sold in 2019. “While brands expect festive season to be good, it won’t make up for the lost sales in previous quarters,” said Navkendar Singh, Research Director, IDC India.

Xiaomi, India’s largest smartphone brand’s spokesperson said that Diwali will help the smartphones market resume normalcy. “However, the expected increase in average selling price in the wake of a rise in GST rates and the rupee depreciation might not take place,” he added.

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