Air-conditioning major Blue Star is mulling setting up of a manufacturing facility in South India, which accounts for almost 42 per cent of its market.

“We would set up a facility in the next two years, as market in the southern States is expected to further grow. This will be our eighth manufacturing unit,” B. Thiagarajan, President, told media persons on the sidelines of the launch of its new range of residential ACs here today.

He said setting up of a facility in the South was becoming imperative, as logistics costs to bring down the products from the north was adding to price pulls. “Logistics costs to bring the products from the north to the south are about Rs 600 to Rs 700 on every unit,” he said.

Blue Star, which is in the third year of its entry into the residential AC market, currently gets 55 per cent of its revenues from this segment and the remaining 45 per cent from the commercial AC segment. With the commercial sector severely hit by the economic slowdown, the company targets to get 80 per cent of its revenues from the residential sector in the next three years.

The room air-conditioning market declined about 5 per cent in 2012 to due a soft and erratic summer, but Blue Star expects the growth to be 10-15 per cent this year, depending on the summer conditions. The size of the room AC market is estimated at 3.4 million units, with a penetration level of three per cent, as against 25 per cent in China.

Thiagarajan said the company will be spending Rs 25 crore for brand campaign for the ensuing summer in the form of a new set of TC commercials and regional advertisements. “We also intend to enhance our digital marketing efforts on the internet, including social media, considering that 45 per cent of our buyers are between 26 and 35 years,” he said.

amitmitra@thehindu.co.in

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