Blue Star plans new plant in South, likely to invest Rs 175 cr
Feb 10 2013 , New Delhi
The 70-year old firm, having the largest share in commercial air-conditioning (AC) space, entered into room AC segment only in 2011 and caters to the market from its two plants in Himachal Pradesh.
The other five plants produce air-conditioners for use in corporate and commercial segments.
"We are a late entrant in room air-conditioning space. But our sales have touched 2.5 lakh units in 2012. In 2013, we are hoping to clock over nine per cent sales growth," Blue Star's President (Air-conditioning & Refrigeration Products Group) B Thiagarajan told PTI.
Thiagarajan said Blue Star's existing capacity for the room AC segment-- at present 3.75 lakh units at two plants in Himachal Pradesh-- would suffice the need for up to 2015. However, with growing sales, it needs to add up capacity to meet future requirements from the room air-conditioning space.
"Hence, we plan to set up a new facility. Since 40 per cent of our sales come from South, it is only prudent to have a manufacturing base over there. None of our existing seven facilities is located in this part of the country," he said.
Thiagarajan said the proposed plant would have an annual capacity of manufacturing at least five lakh units, which is essential to reach the economy of scale. The facility in the South would also help the company to save a lot on the cost of transportation.
He said the plan would be crystallised before the end of this year since it takes around 18 months to build a facility from the stage of conceptualisation to going on stream.
Thiagarajan declined to share the investment needed for setting up the plant.
However, industry sources said a plant of that size would cost around Rs 175 crore, including the cost of the land.
India's room air-conditioning market is pegged at Rs 6,500 crore. The industry has witnessed negative growth in the last two years by five per cent and 10 per cent respectively.
However, Thiagarajan, who is also the President of the Refrigeration and Air-conditioning Manufacturers' Association, said this year the growth would be in the range between 15 and 20 per cent given the low base of the last year. The signs of market revival could also be noticed since the festive season.