MUMBAI: Seven years after Japanese AC giant Daikin Industries entered the country through an 80:20 joint venture with the Shriram group, the company said it plans to setup a greenfield facility to cater to the growing domestic demand.
Chairman Noriyuki was quoted in the local media on plans to set up AC plants in India and Europe.
He said the company would invest 3 billion yen, or about $25 million, in the country to build a business-use air conditioner plant in Delhi or at a site near Mumbai. The plant is expected to go on stream before the end of 2008.
Daikin, which bought out the Sriram group’s stake in the joint venture in 2004, had been considering setting up a greenfield location for the past few years but low volumes were acting as a deterrent. It has earlier said unless volumes cross 100,000 units a year, it made little sense to set up a manufacturing facility.
Daikin has an assembly unit in Silvassa and imports components from Thailand and compressor from Japan. Taking benefit from the Indo-Thai Free Trade Agreement, up to 60% of its components are imported from that nation.
“Factors like low penetration, GDP growth, rising salary levels, price erosion, and explosion of nuclear households is boosting the AC market. From about 1.5-1.6 million units last year, this year the market size is likely to be 2 million units. And we see this growth rate to continue for two years at the very least,” Madhav Nene, deputy general manager, marketing, Electrolux, said. Electrolux competes with Daikin in the Indian AC market.
Market watchers say Daikin is present in the niche AC segment, which is growing faster than the overall market.
The demand for split ACs is growing by 30-35% annually against 20% for the overall market. The company has a stronger presence in the commercial segment than the household segment. Close to 70% of its sales come from commercial establishments.
