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    Blue Star expects 20% plus rise in AC demand; margins to improve

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    Blue Star expects 20% plus rise in AC demand; margins to improve

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    In an interview with CNBC-TV18, B Thiagarajan, MD, Blue Star, mentioned that the demand for air conditioners (ACs) is good across the country. He believes the demand for air conditioners should rise at least 20 percent when compared to the 2019 summer.

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    As the scorching summer sun is making temperatures soar, the demand for cooling appliances might see an uptick.
    To understand the demand scenario, CNBC-TV18 caught up B Thiagarajan, MD, Blue Star.
    Thiagarajan mentioned that the demand for air conditioners (ACs) is good across the country. He believes the demand for air conditioners should rise at least 20 percent compared to the 2019 summer. He explained that 40 percent of AC sales happen during the months of March, April and May.
    "We are all excited about the summer season and not only Maharashtra, across the country, in almost all the markets, the temperatures are soaring and the demand is good. March 2022 was a very good month compared with March 2021 or 2020 or 2019 for that matter. This summer season, I see that demand should be up at least by 20 percent compared with the 2019 summer. We are looking at around 25 percent growth," he said.
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    He is optimistic of margins being better than Q3 levels, going ahead. He mentioned that the company has taken 2-3 percent price hikes in April across products. He explained that even though Blue Star had taken a total of three price hikes in 2021, the company still had to face a margin erosion of 150 basis points.
    "There were three price hikes in 2021- in March, July and October. Despite all that, the margin erosion was around 150 basis points, and we had indicated that the same level of margin should be carried through the summer. But then there was another price hike of commodities due to the ongoing geopolitical conflict and we have increased the prices from April by around 2-3 percent on various models," he said.
    "So with that, I think the margin should be slightly better than what it was in Q3, which will be relatively low as compared with March 2020. I think margin should be, more or less for the full year, same as March 2019. That is my estimate," Thiagarajan added.
    On the PLI scheme, he shared that Rs 220 crore has been spent by the company for new facilities.
    "We are going ahead with the commissioning of the Sri City plant. It should be inaugurated sometime in October or November 2022. Rs 220 crore has been invested and we are under the PLI scheme as well. So, all companies should be commissioning new facilities between 2022 and 2023," he said.
    Watch the video for the full interview.
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