Tamal Chaudhuri’s email ID on his visiting card, @hotwater.com, leaves no doubt as to what business he is in. The Managing Director of A.O. Smith India Water Heating Pvt Ltd, the Indian arm of the $1.7-billion A.O. Smith, the US maker of water heaters, is gung ho about the growth in the Indian market for water heaters.
A.O. Smith, which invested Rs 50 crore two years ago to set up a 4 lakh units a year plant near Bangalore, now intends to invest around Rs 100 crore to expand its facility.
It intends to add 1,50,000 sq ft, in addition to its existing 76,000 sq ft manufacturing facility on its 20-acre plot of factory land. This expanded facility will come into play by June 2013, said Chaudhuri, addressing the media here today.
The capacity is being hiked from 4 lakh water heaters a year to make 12 lakh water heaters a year, he said. The expanded facility will allow A.O. Smith to make larger geysers for the commercial market and it will also be able to make its entire range here. At present, the company’s business is 95 per cent residential and it intends to grow the commercial segment. The plant will also make water heaters with refrigerants and heat exchangers which will consume only 250 W of power.
The Rs 800-crore water heater market sees sales of 20 lakh units a year and is growing approximately at 7 per cent a year. A.O. Smith, which has an approximately 14 per cent share of this market, intends to garner an 18 per cent share in a couple of years. Brands such as Bajaj and Racold lead the market for water heaters.
The energy efficiency ratings mandated now is seeing the market for unbranded geysers coming down and branded players constitute 70 per cent of the market today.
A.O. Smith has a tie-up with the taps and plumping brand Jaquar which in turn does turnkey jobs for large residential projects. Chaudhuri pointed out that many residential projects around the country were in the stages of being completed and handed over and that could lead to a surge in demand for geysers.
TN Market down
Tamil Nadu, said Chaudhuri, is among the largest markets for water heaters, selling around 1.5 lakh a year. However, the sustained power cuts this year in the State, has led to a 15 per cent drop in sales for the industry, he said. The industry is keeping its fingers crossed that the New Year sales that the State sees can help boost sales of water heaters as the industry itself clocks at least 40 per cent of its sales from the last, and coldest, quarter of the year.