The air-conditioning major Blue Star is betting big on 15-20 per cent growth in 2018, thanks to the rise in the room AC market, which grew by 10 per cent last year.

“There are strong indications of a severe summer this year and the market is expected to further grow driven by the rise in demand. We have consistently outperformed the market growth rate and year-after-year since 2011, the company has gained significant market share,” said B Thiagarajan, Joint Managing Director.

India, according him, offers a huge potential for the growth of room ACs as the market size is only 5.5 million units with a penetration of four per cent compared to China’s 80 million units and 30 per cent market share.

He was speaking to BusinessLine on the sidelines of the launch of new air-conditioners, including 40 highly energy efficient inverter split ACs in the Kerala market.

Today, the average age of AC buyers is 25-35 and ten years ago, it was 45-55 years. The GST had a neutral impact on the cost and the transition is completed. He said the increase in commodity prices and adherence to new regulatory norms have led to an increase in the price of air-conditioners by 4-6 per cent.

Inverter technology

But the industry is able to withstand the price increase and manage to deliver the product. Inverter is the technology that drives the room air-conditioner market and by 2020, 70 per cent of the market will be inverter ACs.

Considering these facts, he urged the government to provide incentives for inverter ACs by reducing the GST to five per cent from the present 28 per cent.

Besides, there should be zero per cent tax exemption to schools, clinics, nursing homes and so on, on purchasing ACs.

With a current market share of 11.5 per cent, Thiagarajan said Blue Star is focussing on smaller towns where the sales contribution of tier-III and IV towns were 52 per cent.

He expressed the hope that the company’s market share would touch 12.5 per cent in FY-19 as the aspirational middle-class is driving growth, who prefer premium brands.

The company plans to invest about ₹55 crore in the forthcoming summer season with a set of TV commercials supported by ads in newspapers. It also intends to enhance its digital marketing efforts in social media as well as the internet.

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