EESL AC scheme achieves less than 1% sales target

Kuwar Singh New Delhi | Updated on March 18, 2021

Saurabh Kumar, Executive Vice-Chairman   -  Businessline

EESL began retailing the air conditioners from July 2019

Two years since the launch of its super-efficient air conditioner programme, Energy Efficiency Services Ltd has managed to sell less than two thousand units, only under 1 per cent of the programme targets.

“EESL has procured and delivered approximately 1,953 super-efficient air conditioners up to February 17, under the programme,” the firm told BusinessLine in response to an RTI query.

The programme was launched in February 2019, though EESL began retailing the air conditioners from July 2019. The firm announced a target to sell 50,000 air conditioners in the latter half of that year and another two lakh in 2020. Owned by public sector companies under the Ministry of Power, EESL also awarded the tender for mass procurement of 50,000 units from Voltas Ltd.

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Under the Bureau of Energy Efficiency’s star ratings, a 5-star air conditioner has an Indian Seasonal Energy Efficiency Ratio of 4.5. On the other hand, the super-efficient air conditioner made by Voltas for EESL claims to have an even higher ratio of 5.4, alongside only a handful of other models in the Indian market.

EESL launched the programme only in New Delhi, where customers can buy the air conditioner on the firm’s e-commerce website. The online purchase option has since been extended to a few other cities, but only a select number of Voltas dealerships sell this air conditioner model.

A market assessment study conducted recently by EESL notes the shortcomings of trying to sell a big-ticket appliance online. “About 90-95 per cent of the air conditioners are still sold through the traditional routes such as authorised OEM dealer shops or big stores such as Croma, Sargam, Vijay Sales, etc.” the study report says.

“The consumer still prefers to get the look and feel of products such as AC and refrigerator before buying it. Even in the evolved consumer base which buys these products online, the main reason for them doing so is because of the trust and confidence acquired by the e-commerce giants over the years,” it adds.

EESL has built a business model of mass procurement from manufacturers as a strategy to drive down the final price for consumers. However, when it comes to air-conditioners, customers have strong brand preferences, the study notes, rendering mass procurement from a single cheapest manufacturer impractical in a market that values variety and consumer choice.

“We were hampered by Covid all of last year. But going forward, we are trying to build a franchise-based model for the coming summer season,” a senior EESL official told BusinessLine.

The approximate investment on this programme is around ₹190 crore, which is partially met through a grant from the Global Environment Facility and a grant and a loan from the Asian Development Bank, EESL had said in a statement while announcing the launch of the programme.

Published on March 18, 2021

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