To capture the rising demand for air conditioners (ACs) among Indian households, Japanese company Daikin started manufacturing room ACs at its Neemrana plant in 2012. By end of 2014, it had become one of the top-three players with 14 per cent share of the room AC market in its kitty. Kanwal Jeet Jawa, managing director of Daikin Airconditioning India, reveals the company's manufacturing and growth plans to Arnab Dutta. Excerpts:
Compressors are still imported from South-East Asia. Are you planning to produce compressors in the country?
Currently, we procure some two million compressors from three plants in Thailand, which is enough for our present requirements. But looking at the rate at which demand for AC is growing, we are thinking of setting up a manufacturing unit here as we want to double our sales to one million units in next four to five years from half a million currently.
For the industry, the barrier was probably the small size of the market, which is not the case anymore. And with new (smart) cities coming up, the demand is poised to explode as penetration level crosses five per cent in India.
Please shed some light on the journey, strategy and vision of Daikin in India.
We started manufacturing chillers here in 2009 followed by room ACs. Last year, we sold 400,000 ACs from 32,000 in 2012. We have achieved Rs 2,600 crore revenue in 2014 from Rs 292 crore in 2010. Now, 32 per cent of our revenue comes from inverter ACs. Though we are a company that focuses on delivering superior technology to consumers, we also believe in sustainable growth. When we entered the Indian market, we had a target of becoming one of the top-three players, which we have already achieved. Now we want to be number one by 2020 - like we are globally.
Keeping in mind the competition, would Daikin be able to reach the top spot and hold on to it in five years?
To grow and to hold your dominance in a market as big as India are two different things altogether. Our experience says one can grow to a certain extent in a fast-growing market by selling ACs that are manufactured elsewhere - without making much investment. But a company has to invest in manufacturing and R&D to hold on to its top position in the market. Our R&D centre will be functional by early 2016.
We are in talks with four states for locations of our second plant in India apart from considering the option of expanding our current capacity at Neemrana.
What differentiates Daikin from other players?
We are now focusing on the R32 refrigerant technology - which is not only technologically superior but also economically viable and environment friendly. We have direct access to funds, technology and training and development from Japan, which gives us a clear edge over other players in the market.
With the aggressive approach, is Daikin looking to move away from its global marketing strategy of not doing TVCs and celebrity endorsements?
We market ourselves differently in India, too. We are targeting people who influence buyers' decisions. Not only does Daikin grace homes of Sachin Tendulkar, Ambanis, KP Singh, Oberoi Uday Vilas and Taj, large builders like L&T, Ahuja, DLF and prominent architects, interior decorators use our products, too.
Currently, we are increasing availability of our products by increasing dealer network to 3,400 from 2,600. We are also conducting regular customer engagement programmes to make people aware about our superior quality and values.
