Air-conditioning products and solutions provider Blue Star Ltd, which has been planning to set up two greenfield manufacturing plants in Jammu and Andhra Pradesh with an outlay of ₹300 crore (₹150 crore each), is likely to reconsider the move on the Jammu unit.
This comes in the backdrop of the proposed changes the new Goods and Services Tax (GST) regime is likely to bring about, and also the possibility of missing out on the concessions that the State would have potentially offered for a new manufacturing unit, according to B Thiagarajan, Joint Managing Director of Blue Star Ltd.
Speaking after announcing the launch of a new range of energy efficient air-conditioners, the Blue Star JMD said, “Though we have acquired land in both these locations, and begun works on the Jammu project, the likely changes post the GST regime roll-out in July this year, we believe may not work out in Jammu. Some of the State concessions may be off. So it would make sense to set up one bigger manufacturing plant in Sri City in Andhra Pradesh.”
The Sri City site is located ideally and would provide the facility to not only serve the South Indian market, where the company does not have any manufacturing facility, but also meet some of the export markets through ports located nearby. Showcasing some of the recent products that the company has introduced, Thiagarajan said the company’s home AC business has grown by about 35 per cent this year so far as against the industry growth of about 15-20 per cent. The company, which closed last fiscal with revenues of ₹3,500 crore aims to double its turnover to about ₹7,000 crore by 2019. The company’s growth also factors significant contributions from exports.
Blue Star believes the country’s AC market, which accounts for sales of about 5 million units per annum, is likely to cross 10 million units by 2020. Therefore, most of the major AC manufacturers are eyeing the Indian market.
Predicting a strong growth for AC sales during the year, Thiagarajan said there was no major impact of demonetisation on AC sales.
“The company aims at a market share of 12.5 per cent this year. We expect to spend big time on brand communications with a new campaign and back it up with network expansion,” he said.