Air-conditioner and commercial refrigerator manufacturer Blue Star today said it will invest about Rs

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40 crore on new product development and brand promotion this year.

"It (investment) will be around Rs 25 crore on R&D for this year and another Rs 15 crore for advertising and marketing," Blue Star President (Air-Conditioning and Refrigeration) B Thiagarajan said after unveiling the company's latest range of products.

Stating that the company's room air-conditioner business grew by 29 per cent in 2011, he told reporters here that the company plans to tap tier-I and II cities as a part of expansion plans.

"We have planned aggressively to enter rural areas... We will be increasing our presence," he said.

The company's Vice-President for the Room Air-Conditioners Division, C P Mukundan Menon, said the company will be expanding its presence to 60 more locations this year.

He said the new products adhere to the norms laid out by the Bureau of Energy Efficiency (BEE).

"The first regulations were issued on January 1, 2010, and it ended on December 31, 2011. The second slot of norms were announced in January. These are valid till December 31, 2013. The products follow the new norms," he said.

Asked if the company is witnessing an increasing trend in the sale of star-rated air-conditioners, he said last year, 50 per cent of the sales came from two-star and five-star rated air-conditioners, while the remaining 50 per cent came from three-star rated air-conditioners.

"Our assessment is that this year, sales of five-star rated air-conditioners may come down and that two-star and three-star may go up," he said.