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Air-conditioning and commercial refrigeration major Blue Star Limited is looking at Karnataka and Seemandhra to set up its new manufacturing plant for room air-conditioners and deep freezers. The company intends to invest close to Rs 150 crore to set up the plant with an initial capacity of 500,000 units per annum.
“We are in the process of doubling our market share from the present 7.5% per annum and South India contributes a significant 40% of our total sales annually. Setting up of a manufacturing plant in South will help us save our logistics cost significantly and help expand our market share,” said B Thiagarajan, Executive Director and President – AC & R Products Business, Blue Star Limited.
He said the company intends to manufacture room air-conditioners and deep freezers at the new plant, which will be operational by end of 2015. “We are currently in talks with the governments of Karnataka and Andhra Pradesh as well as Tamil Nadu for setting up our new plant. We require about 5 acres land and we have short listed Sri City and Bangalore,” he told Business Standard.
Currently, Blue Star has five manufacturing facilities at Thane, Bharuch, Dadra, Himachal and Wada. It has a capacity to manufacture 300,000 units of room air-conditioners per annum, which will be increased to around 800,000 units per annum by 2017. “With our current facility, we can go up to 400,000 units per annum. But, we need additional capacity to meet the growing demand for our products,” Thiagarajan said.
Blue Star sold 252,000 units in 2013-14 and aiming at 25% growth in FY15. The company expects the new growth to come from newly launched Inverter Split ACs and other products like 3-star and 5-star rated room air-conditioners.
This summer, the company intends to aggressively promote its new range of inverter split air-conditioners.
Blue Star is also launching a multi-media advertisement campaign involving a budget of Rs 25 crore, which includes a set of TV commercials supported by ads in mainline dailies, cinema halls and hoardings. It also intends to enhance its digital marketing efforts in social media as well as the Internet, considering that most of its buyers belong to the highest socio-economic category (SEC-A), which are active on the Internet, Thiagarajan said.
The room air-conditioners market is estimated at 3.5 million units valued at Rs 7,000 crore and growing at 15% in FY15. Other major players in this market include Voltas, LG, Panasonic, Hitachi and Daikin. Voltas is the market leader with about 19% share, followed by LG.
Blue Star has a market share of 7.5% in terms of volume and 8.5% in terms of value. Blue Star expects 55% of its total sales to come from Tier 3, Tier 4 and Tier 5 towns, while 38% of the sales would come from Tier 1 cities (8 cities).
“Consumers in non-metros are high in aspiration and prefer premium brands,” he added.
