Somany plans to set up plant at Hyderabad for manufacturing water heaters

Shobha Roy Kolkata | Updated on March 06, 2020

Consumer appliances company Somany Home Innovation Ltd (SHIL), which sells its products under the brand name Hindware Appliances, is looking to set up its first company-owned plant at Hyderabad for manufacturing water heaters. The estimated capacity of the proposed plant is likely to be close to six lakh units per annum.

According to Rakesh Kaul, CEO and Whole-Time Director, SHIL, the company which is primarily into three categories – water purification system, air purification system and kitchen chimneys – depends on third-party manufacturing at present.

“We have bought land (for setting up the plant) in Hyderabad and we should be able to firm up on our plans for the unit, including the estimated investments, in the next two months,” Kaul told BusinessLine.

The water heater market in India is pegged at close to 3-3.1 million units annually. SHIL holds approximately 8 per cent of the market share with sales of around 2.5 lakh units per annum.

“We hope to be able to raise our share in the water heater market (in India) to 12 per cent in the next two years,” he said.

The plant, once operational, would also help the company cater to SAARC countries, particularly Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal and Sri Lanka. The company recently started exporting some of its products to Nepal and Bhutan.

SHIL has a strategic partnership with Groupe Atlantic, a Europe-based company known for its heating solutions segment. The tie-up with Atlantic will help the company scale up its presence in international markets, particularly SAARC countries, he pointed out.

Growing business

The consumer business vertical, which was a part of HSIL in 2015 with a turnover of ₹18-20 crore, was demerged in August 2019 and placed under SHIL. In financial year 2019-20, SHIL is expecting to clock a turnover of around ₹540 crore.

“We have been growing at a CAGR of around 45 per cent in the last four years. We have seen good growth in our kitchen appliances, which now accounts for nearly 40 per cent of our business, air coolers (around 20 per cent) and water heaters (close to 18 per cent),” he said.

Water purifiers and air purifiers are expected to be some of the emerging categories for the company going forward because of the low level of penetration of these in the country, he said.

The company is expecting 35-40 per cent growth in business in the next financial year, backed by addition of new product categories. SHIL recently forayed into ceiling fans under the brand name ‘Hindware Snowcrest’.

It is also in the process of considering the roll-out of one or two more products shortly. It is also betting big on IoT-enabled connected appliances. The company already has smart (IoT-enabled) kitchen chimney, water purifier and water heater. It is looking to bring internet connectivity to other range of products.

SHIL also has retail stores under the brand name Evok, which is into home furnishing products ranging from furniture, home décor and modular kitchens, among others. It currently has 10 company-owned stores and 15 franchisee outlets. It hopes to take this to 50 stores in the next two years, primarily via the franchisee model.

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Published on March 06, 2020
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