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Wednesday, Aug 09, 2006

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Industry & Economy - Air-conditioners & Refrigerators
Marketing - Insight
What's hot is air-conditioning!

D. Murali

How big is the AC market in India? According to the latest annual report of Blue Star Ltd, it is Rs 5,600 crore. The amount is split equally between the centralised variety, and the window/split air-conditioners. A smaller but a growing `climate control' segment in India is that of commercial refrigeration, estimated at Rs 1,200 crore. Blue Star anticipates "a dramatic increase" in the cold chain business, with a growth in the production and export of vegetables and fruits.

With large industrial houses announcing plans for contract farming and branded exports, there should be demand for "pre-coolers, bulk cold storages, transport refrigeration and perishable cargo complexes," Blue Star hopes, after having seen a 25-per-cent jump in its revenues and profits last year. Three-fourths of the company's revenues were from centralised AC systems, a segment in which "the IT/ITeS and retail segments fuelled the demand".

The room AC market size is said to be around 15 lakh units, growing at a fast clip amidst intense competition. Though Blue Star's share is only 60,000 units, an insight of value is that window ACs grew 20 per cent, in comparison to a 100 per cent growth in the split AC volumes.

Another player in the AC industry is Hitachi Home and Life Solutions (India) Ltd. Its estimate of the market size is Rs 3,400 crore, with the room AC segment contributing the major share of around Rs 2,500 crore. One learns that ACs are "the highest growing category in the durable space", expected to "continue to grow at around 15-20 per cent for the next few years".

In the room AC segment, residential and commercial are in the ratio 60:40. Hitachi foresees that the residential share would go up to "almost 80 per cent in the next five years in line with the international markets." However, AC penetration is less than 2 per cent. Not far different, that is, from PC penetration, which stands at 18 per 1,000.

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