Blue Star expects pre-Covid level sales in AC, refrigration in March qtr

Blue Star expects sales from residential air conditioner and commercial refrigeration segment to touch pre-COVID-19 level in the fourth quarter of the current financial year, a top company official said.

Sales in the residential AC and commercial refrigeration segment were around 80 per cent in the July-September quarter compared to the same period a year ago.

"Whatever lost in Q1 is lost. It was 50 per cent sales in Q1. In Q2, the market has gone up to 80 per cent. In Q3, it will be 90 per cent of last year and in Q4, we would have around 100 or 110 per cent," Blue Star Managing Director B Thiagarajan told PTI.

In the wake of the coronavius pandemic and economic disruptions, the AC industry lost most of its peak time sales in the first quarter -- the April-June period when most of the sales of cooling products happen as summer peaks.

However, the company, which is also into commercial cooling space, expects that recovery in this segment will take a longer time.

"... recovery would be slower because most of the places such as offices, malls, hotels, cinema, halls and restaurants are closed," he said. Offices are a large segment in the commercial cooling business and "will take a long time to recover," he added.

However, some segments like manufacturing, food processing, pharma, FMCG and bank and financial institutions are doing well, Thiagarajan added.

About capital expenditure, Thiagarajan said it would be as planned.

The company has raised money from the market through non-convertible debentures to meet its capital expenditure and other expenses after the lockdown.

"We would be on routine as planned because that pressure is over. It was important for us to raise capital. Right now, it is going to be very smooth. There is nothing to worry now," he said.

Blue Star is expanding its Wada plant in Maharashtra for setting up a deep freezer factory.

Regarding sourcing of components for the cooling industry from countries such as China, Thiagarajan said India does not have the scale to manufacture it.

"The government has understood now that India should start manufacturing these components and scale should grow. Hence, it has put the phased manufacturing programme in place and is also introducing Production Linked Incentive Scheme like for mobile manufacturing," he said.

This will happen over a period of time and till then, the industry has to depend on imports for compressors, microprocessors and copper tubes from various countries, including China.

"Blue Star is not going into the component manufacturing because the scale would not justify," he noted.

On Wednesday, the company announced the launch of a range of new products and solutions with Virus Deactivation Technology (VDT). Blue Star has claimed that VDT will deactivate viruses, including COVID-19, with up to 99.9 per cent efficacy when air passes through these systems.

"The company would introduce this solution in both B2B (Business to Business) and B2C (Business to Consumer) segments," Thiagarajan said.

Most of the VDT components have also been designed in such a way that they can be easily retrofitted into existing AC systems, both central and unitary, in the field.

"These VDT solutions will be useful for all air conditioning applications, be it at homes, ATMs, showrooms, restaurants, offices, or large commercial spaces like malls, cinema theatres and airports," the company said.

Blue Star reported a revenue of Rs 4,786.49 crore in FY 2019-20. Its revenue from operations was down to Rs 626.02 crore during the pandemic affected-June quarter. In the year-ago period, it was at Rs 1,575.45 crore.