Companies

Hitachi Air conditioning plans global design and development centre in India

Abhishek Law Kolkata | Updated on June 03, 2019 Published on June 03, 2019

Gurmeet Singh, Chairman and MD, Johnson Controls-Hitachi Air Conditioning India

Johnson Controls-Hitachi Air Conditioning India, makers of Hitachi brand of air conditioners, is setting up a global design and development centre in India at a cost of $20 million (nearly ₹140 crore).

According to Gurmeet Singh, Chairman & Managing Director of the company, the investment has already been made and it is likely to be operational from September.

Nearly, 120-150 engineers will be working at the centre.

“The design and development centre should be up by September. It is nearly 80 per cent ready,” Singh told BusinessLine.

The design and development services are critical to its India growth story. It already features on the financial results of the company as a separate segment.

Growth in India

After a lacklustre FY19 following a slow-down in AC sales, Hitachi is targeting a 15 per cent growth this year. Room and commercial AC sales will be the drivers.

Turnover for FY19, remained near stagnant, on a Y-o-Y basis, at around ₹2,241 crore, while net profit stood at ₹86 crore (₹100 crore), down by 14 per cent . The company’s operating profit margin was 7.88 per cent and net profit margin 3.83 per cent.

AC sales are known to be seasonal with the first and last quarters (April – June and Jan – Mar) of a fiscal being the peak sale months.

“FY19 was not a good year for AC sales across the industry. However, April and May of this fiscal was positive. Roughly the market could have witnessed an 8-10 per cent growth during this period,” Singh said.

In fact, Hitachi is expecting gains coming in south and west Indian markets, apart from the north where it has a relatively stronger presence. In order to bring down price of its offerings, Hitachi re-designed products and optimised costs. “Earlier we were premium by 20 per cent. But, with product redesigning and cost optimisation, we command a 3-4 per cent premium. So we continue to be a premium brand, but with a much narrowed down product price gap,” he explained.

Hitachi’s manufacturing facility in India is at Kadi near Ahmedabad, Gujarat and it has a capacity utilisation of 75-80 per cent. The facility has a capacity to manufacture 900,000 split ACs in a single shift and can be ramped up. Almost all of its ACs sold in India, is Made-in-India.

Growing Exports

Hitachi already began exports (from India) of room ACs to select markets that include West Asia, Sri Lanka and Bangladesh. Nearly 3 per cent of its India turnover comes from export.

According to Singh, the company will tap West Asia, Africa and the SAARC region as it targets exports to go up to 5 per cent of its turnover.

“India-made products have good acceptance in these markets. So naturally, we would look to tap them first,” he said.

Published on June 03, 2019

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.