Air-conditioning and commercial refrigeration major Blue Star Ltd will set up its eighth manufacturing plant in South India with an investment of Rs 150 crore.

“We are scouting for land to set up this plant which would have a capacity to manufacture five lakh units annually,” said B Thiagarajan, Executive Director and President, AC & R Products Business.

The company currently has seven manufacturing plants: two each in Himachal Pradesh and Maharashtra, and one each in Uttarakhand, Bharuch (Gujarat) and the Union Territory of Dadra and Nagar Haveli.

In view of the recent withdrawal of excise duty concession and the dollar appreciation, the prices of air-conditioners in India are likely to increase marginally in the coming summer season, he said.

Room AC market size

Thiagarajan said the room air-conditioners’ market size in India is only 3.75 million units annually, with a penetration of just 3 per cent population against China’s corresponding numbers of 50 million and 25 per cent, which is the highest globally.

Blue Star had entered the room air-conditioning segment in 2011. At present, about 20 leading companies manufacture room air-conditioners in India.

The room air-conditioning market in India, worth Rs 9,500 crore, is expected to double in the next three to four years with a 15 per cent growth.

Blue Star, he said, expects to outperform the market with a 25 per cent growth. In 2014-15, the company had commanded a 30 per cent market share in room air-conditioning segment in India.

Blue Star currently offers 80 models, of which 17 are equipped with eco-friendly refrigerants. Its sales in 2014-15 were Rs 2,800 crore.