An investment of Rs. 100 crores to expand the manufacturing of air conditioners in India (looking at an annual capacity of eight lakh units over the next 3-4 years) has been lined up by Godrej Appliances. A new AC manufacturing line has already been established at its Shirwal plant in Maharashtra spread over 1.5 lakh square feet with a capacity of manufacturing 4 lakh units annually. Rs 50 crores out of the Rs 100 crore have already been invested here. This amount has been aimed to enhance its machinery, tools infrastructure and backward integration for the air conditioner category while also catering to AC heat exchanger coils & Indoor Units. Kamal Nandi, Business Head of Godrej Appliances went on to address the media. He explained how investments into manufacturing are part of Godrej’s plans to ensure 100 percent indigenization of its appliances where they are all made in India. In order to give this vision a shape, Rs 1,100 crore in the last 6-7 years in the manufacturing of appliances and in automation and R&D at its plant have been invested by the company. A new range of 30 ACs has been launched by the company, claiming they are fully Made in India along with being eco-friendly air conditioners.
The company said in a statement, “The new air conditioners come with a special ‘Nano-Coated Anti-Viral Filtration Technology’ which eliminates 99.9% viral and bacterial particles coming in contact with the Nano Coated Filter surface, safeguarding consumer health and improve the hygiene at home. The entire new range spanning 30 models, uses only the most eco-friendly refrigerants – R290 and R32, thus offering the lowest Global Warming Potential (GWP).”
Holding a market share of 10 percent over the next 3 years is Godrej’s vision. It already holds over 5 percent share in the AC segment. The company saw a massive impact on sales in the last fiscal due to the pandemic and rising commodity costs and thereby decided to invest in the air conditioning segment. Nandi conveyed the observance of ACs being impacted the most negatively in appliance segment in the past year due to the pandemic, which can be owed to the stringent lockdown that imposed during the first quarter of FY21. It was further added by Nandi, “The first quarter, which contributes 35-40 percent to AC sales was most impacted and we never recovered from that. Then by Q3 and Q4, the segment was impacted further by rise in commodity prices and then there was also custom duty hike in compressors for AC and fridges which added to costs.”
The company has now placed a bet on the work from home trends, which is combined with increasing disposable incomes and rising summer temperatures. Nandi observed penetration of only 5 percent of the AC market, hence leaving a lot of scope for adoption of ACs going forward.
Godrej is now expecting higher sales this quarter as compared to Q1 of FY20, even the second wave of COVID19 has engulfed the country leading to imposition of stricter regulations. Lastly, Godrej stated that it sees a healthy demand for ACs which can be owed to opening of about 85 percent of markets even now and with rising temperatures. Its main focus will now be e-commerce sales. It targets about 10-12 percent share of its buyers to come from e-commerce platforms in the coming year.