‘We can match China in export of room ACS’
Air conditioning and commercial refrigeration major Bluestar is seeing a demand pick-up for products catering to health care, pharma, FMCG, food industry and residential ACS. Managing Director B THIAGARAJAN tells T E Narasimhan sales may touch pre-covid levels during the festive season and could even increase by
10 per cent compared to last year. Edited excerpts:
What kind of impact did Covid-19 have on the AC industry?
The AC industry lost most of its peak time sales in the April-june period. However, the residential segment is recovering faster and is at 90 per cent level. Offices are a large segment in the commercial cooling business and will take a long time to recover. However, some segments like food retail, food delivery, manufacturing, dairy, food processing, pharma, FMCG, banking as well as financial services and insurance sectors are doing well.
How is the festive season expected to be? Will it reach last year’s level?
What we lost in Q1 is lost. It was 50 per cent sales in Q1. In
Q2, the market recovered to 80 per cent of last year’s levels. In Q3, it will be 90 per cent of last year’s level and in Q4, it will reach around 100 per cent.
There is a possibility that the industry can even grow by 10 per cent in Q4. The government’s move like reduction in GST (goods and services tax) from will make 28 per ACS cent affordable to 18 per and cent push sales. It is a revenue neutral proposition, and I urge the GST Council to consider this appeal.
How did Bluestar manage in the crisis?
We are focused on growing segments such as residential, processed foods, health care, pharma and infrastructure. We have curtailed operating as well as product costs. Since the vaccination for Covid-19 is expected to happen early next year and government and private sectors are augmenting capacities, we anticipate incremental additional demand of around ~300 crore from this sector alone in the next 12 months.
Being the market leader with more than 65 per cent share in the pharma sector, we will benefit. As people spend more time at home and residential projects have started, we also see a surge in the demand for ACS, especially
How will the government’s Atmanirbhar push help AC firms?
The government has understood now that India should start manufacturing these components and scale should grow. Hence, it has put the phased manufacturing programme in place and is also planning to introduce a production-linked incentive scheme like mobile manufacturing. This will happen over a period of time. Till then, the industry has to depend on imports for compressors, microprocessors and copper tubes from countries, including China. Today, the major problem for Indian manufacturers is price and not the quality, because China got scale. Bluestar is not going into component manufacturing because the scale would not justify it.
Did Covid open up new opportunities outside India? Any challenges on exports?
We have potential opportunities to match China in export of room ACS, VRFS as well as refrigeration products and solutions. As I had mentioned, tech or quality is not the concern. The challenge is matching the prices offered by China in the global market.
As a country, we should grow the domestic market and work with the government in initiatives such as Ease of Doing Business so that our productivity improves.