Despite a fire incident in its unit at Kadi, Gujarat, Hitachi Home & Life Solutions expects this year to be better than last year.

The company makes the ‘Hitachi’ air-conditioners and sells refrigerators and washing machines of the same brand. Last year, it reported a net profit of Rs 3.26 crore compared with Rs 29.33 crore in the previous year.

Hitachi Home explained its performance thus: “During the year under review, India’s economic situation continued to decline due to depreciation in INR, high inflation rate and increased interest rates which adversely impacted Air conditioners business. In such indecisive environment, inflow and execution of orders remained slow. In addition to that industry faced the problem of margin pressure in all segments and in fact maintaining profit margin has been a tough job for all the consumer durable players.”

Further, the devastating floods in Thailand made it difficult for the company to source refrigerators from the Hitachi plant there, and this affected sales.

The company expects to do better this year, thanks to a better economic environment in 2012-13 and higher rural penetration by the company.

The company reported a net profit of Rs 14 crore—compared with Rs 3.26 crore for the entire fiscal, but almost the same as the Rs 13 crore it made in the first quarter of last year.

Hitachi, which mostly catered to the premium segment, recently entered the low-price home AC segment with the launch of Kaze, with a two-star and three-star rating to cater to the middle level income group.

The company has increased its presence from 236 towns in June 2010 to 317 towns in FY2012 and is increasing its dealer and distributor base as well.

However, analysts caution that the company’s profits will depend on how the Indian rupee moves vis-à-vis the Japanese Yen. Hitachi pays royalty, technical know-how fees and consultancy fees denominated in Yen—which played a role in denting the profits last year.

>mramesh@thehindu.co.in

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