Demonetisation: Sales Down 25-30 Percent, Says Micromax

Consumer sales have seen a 25-30 percent hit in past few weeks due to twin impact of demonetisation and seasonal slowdown post Diwali, country's third largest handset maker Micromax said today.

While online sales suffered due to cash crunch in the aftermath of demonetisation, the company's supply chain saw a 15-18 percent decline in sales in the last few weeks. However, Micromax said the impact on its sales was lower than that on the industry.

"Our internal data suggests that the effect happening is playing out at two different levels. So sure, consumer sales are down. They are down 25-30 percent. Actually, we guys have got hit far more on the online front because of cash on delivery. But overall, we are trending at 25-30 percent decline in these 3-4 weeks and we think it's a bit lower than

industry," Micromax Chief Marketing Officer Shubhajit Sen said.

He added that the impact on supply chain (distributors) has been around 15-18 percent, in some cases it is as high as 60 percent. Sen said "post Diwali effect" also had a bearing on the numbers.

"...part of it was post Diwali effect and was seen on the entire industry. While we cannot isolate the two, demonetisation had its share as well," a company spokesperson clarified later.

According to industry experts, sales usually fall after Diwali by 10-15 percent given that festive sales see a surge on offers and discounts.

Sen said the situation is gradually returning to normal. "It's not that the market collapsed, it has become a little difficult," he said, adding that the company is offering higher credits to distributors to help tide over the situation.

Sen said the company expects the situation to get better as the new year sets in.

According to various reports, the government's demonetisation drive and the cash crunch that followed has hit sales of mobile handsets, including those sold online.

Mobile phone industry body Indian Cellular Association has said sales have come down by 50 percent due to cash crunch post demonetisation.

Research firm IDC has also indicated that the sequential decline is likely to be higher in the fourth quarter, owing to the cash crunch in the country since the second week of November.

"This has already resulted in significant slowdown of demand across PC and mobile devices; not just in offline retail but in online channel as well, where cash-on-delivery (COD) contributes to a substantial portion of the sales," IDC had said.

The fourth quarter smartphone shipment is expected to see 17.5 percent sequential decline, as per IDC estimates.