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This article is more than 7 month old.

Godrej Appliances to invest Rs 100 crore to ramp up AC manufacturing in India

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Godrej Appliances has lined up an investment of Rs 100 crore to expand the manufacturing of air conditioners in India as it looks at an annual capacity of eight lakh units over the next 3-4 years.

Godrej Appliances to invest Rs 100 crore to ramp up AC manufacturing in India
Godrej Appliances has lined up an investment of Rs 100 crore to expand the manufacturing of air conditioners in India as it looks at an annual capacity of eight lakh units over the next 3-4 years.
Of this, the company has already invested Rs 50 crore to set up a new AC manufacturing line at its Shirwal plant in Maharashtra spread over 1.5 lakh square feet with a capacity of manufacturing 4 lakh units annually. The investment, the company said, will go into machinery, tools infrastructure and backward integration for the air conditioner category including AC heat exchanger coils & Indoor Units.
The Shirwal plant already manufactures other appliances such as washing machines, refrigerators, chest freezers, medical refrigerators among others.
In addition, Godrej Appliances plans to invest Rs 50 crore more to increase its capacity at its manufacturing unit in Mohali to 4 lakh units by 2025.
Addressing the media, Kamal Nandi, Business Head, Godrej Appliances said that the investments into manufacturing are part of Godrej’s plans to ensure 100 percent indigenization of its appliances where they are all made in India. To this effect, Godrej has invested Rs 1,100 crore in the last 6-7 years in the manufacturing of appliances and in automation and R&D at its plant, he added.
Godrej Appliances has also launched a new range of 30 ACs, which the company says are fully Made in India and are eco-friendly air conditioners.
“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),” the company said in a statement.
The company, which has over 5 percent share in the AC segment, targets a market share of 10 percent over the next 3 years.
Godrej’s investments into the air conditioning segment come even as it saw a massive impact on sales in the last fiscal due to the pandemic and rising commodity costs.
According to Nandi, ACs were the worst impacted appliance segment in the past year due to the pandemic, especially due to the stringent lockdown imposed during the first quarter of FY21.
“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,” Nandi added.
However, the company says that it is now betting on the work from home trends, combined with increasing disposable incomes and rising summer temperatures. Nandi says that ACs only have penetrated only 5 percent of the market, leaving a lot of scope for adoption of ACs going forward.
Despite Q1FY21 being a washout, Godrej Appliances now expects to clock higher sales this quarter as compared to Q1 of FY20. And even as restrictions are being imposed across the country amid the second wave of COVID19,
Godrej Appliances says that about 85 percent of markets are still open and with rising temperatures, the company is still seeing healthy demand for ACs. It will also be focusing on e-commerce sales and is targeting about 10-12 percent share of its buyers to come from e-commerce platforms in the coming year.
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