We don’t want to leave any segment untapped, says MD.
Daikin, the world’s number two company in the air conditioning market, has aggressive plans to tap the emerging air-conditioning market in India and has already made an investment of Rs 370 crore. Of this, about Rs 240 crore has been invested in a big manufacturing unit in northern Rajasthan’s Neemrana.
Says Kanwal Jeet Jawa, managing director, Daikin Airconditioning India Pvt Ltd: “We are the world’s undisputed leader in Variable Refrigerant Volume (VRV) air conditioning units. Our growth plan for 2011-12 is to acquire 15 per cent share in the chillers segment, to be number one in VRVs and among the top three in residential air-conditioning. This is an appropriate time to expand rapidly in India and we are going to make a lot of noise, with pro-active marketing and communication strategy.”
A Rs 65,000-crore company globally, it forayed in India about a decade ago and was targeted at the upper middle class and above, using a high degree of word of mouth referrals and dealership programmes. It now aims to create strong brand awareness and penetrate among the growing middle class, among those aware of technological innovations and ready to pay a little more for long-term solutions.
The company started manufacturing outdoor units of VRVs and water-cooled chillers since last year, being the first factory in Daikin and India to be certified with the quality stamp of the American Society of Mechanical engineers and the US Air-Conditioning, Heating and Refrigeration Institute.
The total AC market in India is estimated at Rs 9,300 crore annually, with a volume of five million units. The residential segment comprises 4.5 million units, growing at 20 per cent yearly, further segmented into Window AC (1.5 mn) and Split AC (3-mn units). The other 500,000 units sold yearly are in the commercial segment, growing at 10 per cent yearly.
More From This Section
VRVs are seven-eight per cent and chillers another two-three per cent of the total market. Daikin has about half the VRV market in India. The chillers are a very niche and fragmented market, made on orders. Daikin expects to consolidate its chillers’ position with its acquisition of McQuay. SaysJawa: “We have manufactured 100 units in 2010-11 and we expect the demand to double this year. We would be manufacturing about 200 units in 2011-12.”
On marketing, the company plans to expand its present network of 620 exclusive sales and service dealers to about 1,000 by the year end. It had only 300 dealers last year. It is also developing ‘solutions zones’, a 50 per cent partnership with e dealers to merchandise their products. “We have 50 such plazas now and aim to increase it to 200 plazas by the year end. Apart from that, we organise special training sessions at our factory for the trainees, professional, sales and service dealers to give them a better understanding of the products and its applications,” said Jawa.
It a,lso plans seminars with architects and ventilation/AC consultants to promote their brands among big construction firms. This would be arranged in all metros and mini metros. There are also plans for outdoor promotions and trade campaigns in association with residents’ associations in Delhi and Ahmedabad. The plan is to spend five-six per cent of total top line budget on advertising and sales promotions in Indian markets, as against the three-four per cent globally.The bigger chunk of revenue till now had been from installations in malls, offices, hotels, offices, etc. The focus would also be now on residential ACS.
Says Jawa: “We have seen our sales triple its size in the third quarter of 2010-11 as against the base of the first quarter. It’s a good sign and we don’t want to leave any segment in the market untapped, be it ductibles, cassettes, chillers, VRVs or even room ACs.”