Wednesday

01


March , 2017
The price of air conditioners likely to rise
00:00 am

B.E. Bureau


The air conditioning market is expected to see a price rise by 5-7% in July –September because of the growing prices of raw material and the possible implementation of the Goods and Services Tax (GST), said B. Thiagarajan, Joint Managing Director of Blue Star Ltd. at the launch of Blue Star’s first inverter split AC range.

“Raw material prices like copper, aluminium and steel have been steadily rising for the last few quarters. The proposed GST bracket for us would be 28%, which is disappointing for the industry. Increase in commodity prices and dollar appreciation may lead to price increase before 2017 summer,” said Thiagarajan. According to him, the air conditioner market did well even during demonetisation and it grew by 20% during last year October- December.

The market size of room air conditioners is over 100 million units with a penetration of 30% globally. Whereas the market size in India is 5.0 million units with a penetration of around 4%. Talking about the room air conditioning market, Thiagarajan said that it grew by 20% in the period between April and December 2016 whereas Blue Star grew by 30%. The company expects to reach a market share of 12.5% in FY18. He said that with the current budget, the government is planning to cater to the rural and middle class population. Therefore the companies should also follow the same path. Blue Star has launched its new range of air coolers to cater to the middle class. Around 52% of Blue Star room AC sales come from small towns.

 

Blue Star would invest about `3.5 billion over the next three years in two new manufacturing units in Jammu and Kashmir and Andhra Pradesh. The company is planning to increase its investment to `33 crore in FY18 on new product developments.

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