ACs now not far out of reach

An air-conditioner for Rs 16,000 when the comparable well-known brand costs Rs 20,000? Avi, a small Kolkata-based manufacturer of ACs, is seeking to win by playing purely on price, charging Rs 2,000-4,000 less across the range.

It is able to sell so cheap as its ACs are really 'Made in China'.

Components are procured from the shopfloor of the world and sold after assembling here. Plus, the firm has low establishment and marketing costs.

Says Major (retired) Raj Sahai, founder and managing director of the firm in defence of his business model: "There are no AC manufacturers in the country. All procure parts from different manufacturers and then assemble them here."

In the Indian market of some 1.5 million annual sales, Avi aims to sell a small 30,000 in 2006. While this target of only 2 per cent market share is the initial goal, the firm hopes to raise it to 8-9 per cent.

Avi hopes to gain similar shares across all the markets "" North, East and South. Right now, it has set its eyes on Karnataka after securing a foothold in Andhra Pradesh and Tamil Nadu. The firm hopes to see revenues of Rs 45-50 crore in 2006.

Says Sahai, "Once we reach a certain scale in AC sales in the country, we may consider setting up a manufacturing unit in an SEZ where it will be easier to assemble imported parts and export them cheap." He foresees markets for his products in Sri Lanka and many African countries.

Sahai entered the consumer electronics market by marketing made-in-China LCD TVs and some other gadgets in Italy. He has been in the Indian AC market for 2-3 years.