AC mart warming up to innovations

The air-conditioner (AC) market, with two million units sales last year, is set to grow by 40 per cent to reach 2.8 million units this year with increased focus on energy-efficient ACs. The last two years saw the market grow at around 25 per cent annually.

Of the 8 lakh additional units sales likely this year, Korean chaebol LG Electronics India (LGEIL) aims to capture over 50 per cent share, followed by Samsung (about 20-25 per cent), Voltas (10 per cent) and the remaining spread among Onida, Videocon and others, industry sources said.

As in 2007, split-ACs will drive volumes for most of the companies.

"But unlike last year, 2008 will also see more premium and energy-efficient product sales within the split ACs segment with companies adding fresh capacities," said an expert on consumer durables.

Of the Rs 3,600 crore branded AC market, LG India has a share of 27.3 per cent, followed by Samsung at 16.3 per cent and rest with others. The focus will be on design and energy-efficient ACs, according to experts.

"Future growth lies in this segment and we are going to focus on design, technology innovation and energy efficiency to drive sales," says Rajeev Jain, business group head (air-conditioner division), LG Electronics.

"We will also introduce newer capacities as last year witnessed a 100 per cent growth in the new 0.75 tonne category for LG," Jain added.

This year, the company will be rolling out premium models under the Art Cool series and add a new range of air-conditioners.

Even arch-rival Samsung India, which recently launched its biosleep air- conditioners, hopes to achieve a 65 per cent volume growth this year.

"New features of Samsung air-conditioners coupled with our enhanced channel penetration should help achieve a 65 per cent increase in AC volumes this year. We expect our split AC volumes to grow from around 50 per cent witnessed last year to around 58 per cent of our total AC sales this year," R Zutshi,deputy managing director, Samsung India, said.

Samsung too is entering new capacity segments such as 0.8 tonne and 1.6 tonne in split ACs and 1.6 tonne in window ACs in addition to range enhancements within existing capacity segments.

Says Pradeep Bakshi, V-P, sales and marketing, Voltas, "We have still to decide our plans for this year, but we intend to focus on energy efficiency and better technology across the AC category."

With energy efficiency becoming the new buzzword, another area that will govern competition will be the BEE (Bureau of Energy Efficiency) star rating, experts say.

Carrier India, for example, hopes to create more awareness among customers regarding energy-efficient products to help in decision making.

While most of the companies have already introduced star-rated air-conditioners last year, for emerging players, such as Videocon, the star rating may offer equal growth opportunities.

Says Ajay Bajaj, COO, AC division, Videocon, "With the adoption of star rating, standardisation of products has come into play. Differentiation among products will now be on the basis of star rating which gives us an opportunity to stand on equal base with the competition."