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LG India is targeting a 30 per cent growth in revenue from its commercial air-conditioning business this year against 20 per cent in 2018, with product differentiation being the focus.
Sunil Khatwani, Business Head and Vice President, System Air Conditioning Division, LG Electronics India Pvt Ltd, said that he sees the market growing between 8-10 per cent.
“In 2018, the fastest growth for commercial ACs was driven from sectors like hospitality, healthcare and education, followed by offices,” said Khatwani.
Commercial AC space
When asked about the company’s market share, he said that in the entire commercial AC space, LG ranks number four, butfirst in inverter cassette and inverter ducted ACs and second in variable refrigerant flow system ACs.
On the expansion plans for commercial ACs, he said that the focus will be on product innovation, and a product will be launched in India next year. It is already launched in Korea, Europe and East Asia. It is even more advanced than the magnetic chiller which LG launched in India last year.
To expand market reach it will appoint partners in India. LG India manufactures all products, from residential and commercial ACs to VRF systems, in its factories in Noida and Pune. Only the chillers are made in the factories in China and Korea.
Chillers
“Enough volumes in chillers haven’t been achieved yet. LG has made available the chillers in the Indian market around three years ago. Once the volumes pick up , the local manufacturing of chillers can be started in India”, said Khatwani.
The commercial AC business contributes around 5 per cent to the overall business of LG India and has been growing at around 20-30 per cent in the last three years. On the factors that drive growth in the commercial AC segment, Khatwani said that the growth in the infrastructure and construction industry is picking up in India, with this contributing directly to the growth of commercial air conditioning.
Real estate sector
Once a traction is seen in these sectors, the company’s commercial AC business will start picking up around six months later. He noted that there has been a blip in the real estate sector, with shift from luxury homes to affordable homes as well. But, with the government pushing infrastructure, LG has done well, he said.
While metros posted a good and stable growth year-on-year, the tier-2 and tier-3 cities are the real growth drivers for LG’s commercial ACs, he said. “This is because tier-2 and tier-3 cities have aspirations to reach the level where tier-1 has reached and are fast catching up. Now, I find that even smaller towns are aspiring to have the VRF systems in the residential areas, which was originally belonging to only four or five key metros in India,” said Khatwani.
The increasing purchasing power in these cities also helps the company penetrate into these tier-2 and tier-3 cities, he added.
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