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Air-conditioner makers bet on fresh models, good traction for better sales this summer

NEW DELHI: Albeit a delayed summer in North India, air-conditioner makers such as LG,

Voltas

, Carrier,

Panasonic

and Videocon are hoping for good sales growth this season on the back of fresh models with new technologies and a good traction from non-metro towns and cities.

To hard-sell their products, the companies are coming up with innovations such as air-conditioners with ‘mosquito away’ technology and products that are less power consuming and environment-friendly.

“Despite a delay in the arrival of summers, we are expecting good sales this year. We believe that demand will pick up once temperature levels start rising… We are expecting an increase of 20 per cent in our sales over our sales last year,” Panasonic India MD Manish Sharma said.

Although most consumers are restraining from making non- essential and optional expenses, there is a group of consumers who are not affected by the inflation and are inclined toward purchasing high-end products, he added. Targeting this set of customers, Panasonic would promote its high end product categories.

“Parallely, aiming at the rural segment and cautious, price sensitive consumer, we will be aggressive on pushing competitively priced entry-level products,” Sharma added. South Korean major LG is also upbeat about putting up a good sales growth this year.

“This year we will continue to focus on strong technology leadership in the AC segment with a projected turnover of Rs 2,500 crore and a 28 per cent market share, by the end of the year. We are going to target 25 per cent market growth for this summer season in the AC segment,” LG India Business Head, Air Conditioners Saurabh Baisakhia told PTI.

Apart from the metros, he said the company is looking at smaller and emerging towns and cities in India, the new suburbs, as an important market for ACs as well. ‘Mosquito away’ technology is a feature added by LG in its AC which claims that its ultrasonic waves impacts the sensory range of mosquitoes and keeps them away. Similarly, Tata group firm Voltas, is expecting a good traction as the penetration levels are still very low in India.

“Overall, the AC industry, as well as the white goods industry is witnessing strong head-winds. However, with just 3.8 per cent penetration, there is enough potential to expand and grow in the AC category,” said Voltas President and Chief Operating Officer Pradeep Bakshi. This season, with the upgrade of energy-efficiency norms, the company has lined up a new range of models in both Spilt and Window AC segments, giving consumers a wide choice of new power-saving models, he added.

Intec to foray into washing machines and geyser segment

NEW DELHI: City-based

Intec

group is expanding its product portfolio in consumer durables segment with plans to get into washing machines and geyser besides enhancing its air conditioners range.

The company, which had been a contract manufacturers for other brands, had forayed into the consumer durables segment last year and is targeting a turnover of Rs 100 crore in 2014-15.

“We would launch washing machines under our brand by June this year. We would also launch electric geyser this season in association with a China-based company,” Intec CEO Aamarjit Singh said.

Moreover, Intec would also open around 15 to 20 stores by the end of March 2015. Its products would be available at over 200 sales points this season, he added.

“We are aiming to have a sales turnover of Rs 100 crore in financial year 2014-15. We would open 15 to 20 stores selling exclusively Intec products by March 2015,” Singh said adding that the company would soon start a media campaign and TV commercials would be on air from next week.

The company is targeting to sell 30,000 units this season and investing Rs 30 crore to raise the infrastructure.

“We are targeting the middle segment and the first time buyers. We are pricing it competitively by keeping margins on the lower side,” he said adding that the range of its AC units starts from Rs 17,500 to Rs 1 lakh.

Intec has come out with full range of window, split, tower and inverter air conditions this season.

“We are launching Kids special air conditioners, which would have a coloured panel and have two remote controls — kid remote and one usual remote. We have also launched hot and cold models,” said Singh adding that the company is focusing aesthetics, quality and durability of the product.

Established in 1989, Intec group has manufacturing units at Kala Amb in Himachal Pradesh and at Sriperumbudur in Tamil Nadu and has capacity to roll out 500,000 units annually.

The company had a turnover of Rs 260 crore from its contract manufacturing business in the financial year 2012-13 and has till now supplied over one million air conditioners to various brands in India.

Daikin India eyes USD 1 billion turnover in two years

NEW DELHI: Air conditioner maker Daikin India is aiming to be a USD one billion (Rs 6,500 crore) brand in India in next two years, led by high double digit growth in domestic markets, addition of new products and increase in exports, said the top company official.

Besides, Daikin is planning to have another plant in South India in the next four years to catch up the growing AC market. It will invest around Rs 600 crore in the plant.

In November 2017, Daikin commenced operations at the second factory in Neemrana, Rajasthan, in which the company has invested around Rs 750 crore.

“We would be a billion dollar company by 2019-20. To achieve it, we will grow at the rate of 20-22 per cent,” Daikin India Managing Director & CEO Kanwal Jeet Jawa told PTI.

The company has a turnover of Rs 3,250 crore in 2016- 17 and expects to cross Rs 4,000 crore in the current fiscal, as it has witnessed around 20 per cent value growth in the last three quarters.

According to him, Daikin’s growth would be coupled with exports, persification and new business streams. Commercial refrigeration will further contribute to the growth.

The company is aiming to sell more than 10 lakh units of AC in 2019 and become a leader in the Indian HVAC (heating, ventilation, and air conditioning) segment.

“The growth areas will continue to be tier II & III cities. Indian’s AC sales which stood at 4 million units in 2015-16 are expected to rise to 7 million by 2019-20,” the company said.

Presently, up to 70 per cent sales of Daikin Air Conditioning India, a 100 per cent subsidiary of Japan-based Daikin Industries, come from room ACs and rest from VRV and chiller segments.

It has the capacity to manufacture 15 lakh room ACs, 50,000 VRV units, 1 lakh cassette units, 20,000 ductable units and 1,000 chillers.

“This capacity would serve us till next 3-4 years only. We would have to make our next plant in South operational by 2022,” he said adding the company will soon decide on the location for the plant.

Daikin today launched the latest version of its VRV (variant refrigerant volume) – VRV X- targeting big homes and flats. VRV is normally used in offices and commercial places for cooling.

Besides Indian market, Daikin is also looking to boost exports, although its first priority would be to cater the domestic segment.

“We have started exports to Sri Lanka, Bangladesh, Nepal and South Africa. Now, we have additional production capacity, so we would scout for more markets,” Jawa added.

Exports contribute less than five per cent in Daikin India’s total sales but the company expects it to go up in the coming years.

The company has invested over Rs 2,000 crore so far in its Indian operations.

Evergrande woes hit Japan’s toilet, air-conditioner and paint manufacturers

Concern that China Evergrande may default on its mountain of debt hit shares of toilet maker Toto and other Japanese firms that are seen vulnerable to a further slowdown in China’s property development.

Toto lost 6.1 % on Tuesday, extending its fall since Thursday to 14.8%, on the perceived risk of exposure to Evergrande, which investors fear could miss debt payment later this week.

“There are rising and widely reported concerns about fund flows at leading local developer China Evergrande Group, whose business scale suggests to us it is very likely one of TOTO’s major customers,” said Arisa Katsuyama, analyst at Morgan Stanley.

“Year-to-date debt defaults by real estate companies in China, not just China Evergrande, already exceed the cumulative figure for the past 10 years as tighter regulations bite,” she said, adding investors should bear in mind the risk Toto may have to book loan loss reserves.

China accounted for about 30% of Toto’s profit last year but the firm’s spokesperson said it could not comment on specific transactions including whether it has deals with Evergrande.

Other potential suppliers to Chinese house builders and constructors were also caught in the melee, with air-conditioner manufacturer Daikin losing 4.7%.

Almost a quarter of Daikin’s air-conditioner sales came from China in the last financial year, compared with 13-16% in previous years.

Paint maker Nippon Paint Holding, for which China is by far the largest market, slid 7.5%.

Manufacturers of construction machines, which have long benefited from the construction boom in China, also suffered, with Komatsu losing 5.4% and

Hitachi

Construction Machinery shedding 5.5%.

Investors also dumped SoftBank Group, a big investor in Alibaba and other Chinese tech firms, on fears Beijing will continue to tighten its grip on them.

SoftBank Group shares lost 5.0% as U.S.-listed Alibaba shares hit a two-year low on Monday.

Tomoichiro Kubota, senior strategist at Matsui Securities, said the damage could spread to more companies if China’s slowdown becomes more evident.

“It looks like Chinese authorities are clamping down on outright lavishness, which seems to have support from the Chinese public. That has some resemblance to Japan’s post-bubble era, when expensive house prices were considered bad for ordinary people.”

While many Japanese firms rely on Chinese demand, Japanese institutional investors have relatively limited exposure to Chinese assets.

Japan’s biggest investor, Government Pension Investment Fund (GPIF), had exposure of 9.673 billion yen ($88.31 million) to Evergrande as of March, 5.9 billion yen in bonds and 3.7 billion yen in stocks, out of its 186.1 trillion yen ($1.70 trillion) assets.