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Air-conditioner maker Blue Star Ltd, is planning to set up a manufacturing facility down South, as its room AC manufacturing unit in Himachal Pradesh is expected to run out of capacity by the year end. The company plans to invest close to Rs 150 crore to set up a 500,000 units per annum facility in southern India, which currently accounts for nearly 47 per cent of its sales.
B Thiagarajan, executive director, and president, AC & R Products Business, Blue Star Ltd, said that the company is yet to finalise a location for its eighth plant and would take a call by September this year. "Our room AC manufacturing unit at Himachal Pradesh wouldn't be sufficient beyond December 2015. Hence, we are looking at adding a new manufacturing unit down south, and would take a call about the location by September," he said adding that the tentative investment would be to the tune of Rs 150 crore and the capacity planned is around 500,000 units per annum.
Blue Star has two units each in Gujarat, Maharashtra and Himachal Pradesh, and one at Dadra. The company currently enjoys a 9.5 per cent share of the 375,000 units per annum AC market in the country and is aiming to take that up to 10 per cent in FY16.
The Rs 2,800 crore company has clocked a 30 per cent value growth during the current fisca and a 19 per cent growth in terms of volume. Thiagarajan said that while the market for room airconditioners is expected to grow by around 15 per cent in FY16, Blue Star expects to clock a 25-30 per cent growth during the fiscal, and achieve a 10 per cent market share.
The company, which forayed into the room air-conditioner segment in 2011, now derives nearly 70 per cent of its sales from the residential segment, up from 45 per cent in 2013. The company enjoys a 9 per cent market share in Gujarat which is around 300,000 ACs per year and plans to take that up to 11 per cent by FY16.
Thiagarajan further said that inverter ACs currently comprise only 8 per cent of the overall airconditioner market in the country, but their sales is estimated to triple over the next two years. He added that inverter ACs, which are more power saving than conventional ACs, account for nearly 50 per cent of the AC market of China and about 100 per cent of the market in Japan. China's AC market size is around 50 million units per annum with a 25 per cent penetration. The global AC market is around 100 million units per annum with a 30 per cent penetration. The India market, on the other hand, has only 3 per cent penetration, and hence according to Thiagarajan has huge potential for growth.
The residential AC market size in India is pegged at Rs 9,500 crore, while the commercial AC segment is about Rs 5,500 crore.
