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March 15
Blue Star Ltd continues to strengthen its focus on price-sensitive and first-time buyers in tier-3, -4 and -5 locations with an aggressively-priced new range of split air conditioners under its ‘mass premium’ brand strategy.
While the leading air conditioning and commercial refrigeration major has, under its room AC business, introduced about 50 new air conditioners across inverter, fixed and window categories targeted at different segments such as fast cooling, heavy-duty, super energy-efficient, smart and future-ready (post-July 2020 regulatory regime), it has also widened the offerings in what the company calls “affordable-yet-best-in-class differentiated’ ACs.
“Along with cities and specific market segments, the growth is coming from the affordable middle class in tier-3, -4 and -5 locations. Keeping in mind the first-time buyers and aspirational middle class, we have now expanded our range in the affordable category. Overall, we foresee a huge demand for room AC as there has been an increase in footfalls in showrooms and sales are good across the country,” B Thiagarajan, Managing Director of Blue Star said after unveiling the new products here.
The new affordable split AC will be available at prices starting from ₹30,990, which is lower than the starting price of ₹31,990 two years ago. Despite a 30 per cent increase in commodity price and other costs in the last two years, the company managed to keep the prices of affordable products low.
“A combination of design optimisation, value engineering and other measures helped to keep costs lower,” said CP Mukundan Menon, President & Chief Operating Officer of Blue Star.
The company expects 20-25 per cent growth over the 2019 summer as it expects strong pent-up demand. It aims to increase the market share in the room AC market to 14 per cent by the end of FY23 from 13.25 per cent in Q3 FY22.
Thiagarajan said the company is unlikely to increase the prices of ACs given the spike in prices of raw materials such as copper and steel prompted by the Russia-Ukraine conflict. “We have a comfortable supply chain position till May/June and hence prices will not go up till mid-April. We have may look at price revision if material prices shoot up further,” he added.
The best factory yet...
The company is gearing up to commission “the most modern” and “the best factory of Blue Star” at Sri City near Chennai. It will start producing room AC products from the last quarter of this calendar year.
The cumulative investment in Sri City will be ₹525 crore and the expansion will have three phases. It will have a capacity to produce 3.5 lakh ACs per annum by the end of 2023 and 7 lakh units by 2026. The capacity will reach 12 lakh units in the following year.
Along with the 5 lakh units capacity in the Himachal Pradesh factory, the total capacity of the company will reach 17 lakh units per annum for room AC products. This factory will get incentives under the PLI scheme.
“We are creating capacity for future demand and this will be adequate for the next seven years,” said Menon. The room AC market is estimated at 5.5 million units per year in India while the global market size is 140 million units.
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