Blue Star Plans New Production Facilities

Indian air-conditioning and refrigeration company Blue Star Limited recently launched a new Wi-Fi-enabled range of ACs for the residential and commercial segments and is looking to consolidate its position in north India with a new factory in Jammu. The company is also expanding in southern India with three new production facilities.

B. Thiagarajan, executive director and president for ACs and refrigeration product business, talks to BW Businessworld about Blue Star's growth strategy, product development and competition.

What new products have you launched?
We have launched 135 models of room air-conditioners. Before summer, all of us reinvent ourselves with a new range of products. So we brought 35 inverter air-conditioners which are energy-efficient and 21 models of window air-conditions for our north Indian market. We have also entered into air coolers and air purifier business.

What are the innovations that have you done this year?
Blue Star is amongst the first companies to comply with BEE's (India's Bureau of Energy Efficiency) voluntary labelling programme for inverter split air-conditioners as it has launched 16 models in the 5-star category and 13 variants in the 3-star category, as per the new BEE standards. The entire range of star-rated inverter split air-conditioners is equipped to function smoothly within a voltage range of 160V - 270V, without the aid of an external voltage stabiliser.

How has your company performed this year?
We grew by 20 per cent in the current financial year, which is faster than the average industry growth, and we aim to gain a market share of 12 per cent by 2017. We have grown consistently over the years and many things have changed for us. We entered the residential air-conditioning market in 2011 and now enjoy 10.5 per cent share in this segment. Prior to that we were only present in commercial businesses and at that time we only had 17 models.

When we entered the residential segment, we needed a wide range of products. It requires aesthetically superior quality in terms of design, pattern, sleekness and more importantly efficiency because we have a tough competition in this segment.

What will be your marketing strategy?
We are seen as an expert of air-conditioning in India. We used to spend Rs 4 crore on R&D in 2011 and now it's up to 25 crore, advertising was Rs 2 crore, now it's close to Rs 30 crore and next year it will be close to Rs 40 crore. We have also kept Rs 10 crore for upcoming IPL season 9.

Now our products are available in over 3,000 stores across the country and on e-commerce platforms like Amazon, Snapdeal and Flipkart. Our 30 per cent sale will move to e-commerce by 2020. Residential air-conditioning is now generating one-third of the revenue for Blue Star.

What new goals have you set?
We are not fighting for market share; we are interested in delivering a technically superior product. In three years we will have an in-built air purifier in our air-conditioners. People are being fooled around air purification technology. We are working with IIT-Madras to understand the behaviour of nanoparticles. Blue Star will take a leap ahead of others in technology.

In what ways do you seek to create an impact on the market?
We should work to bring down the cost of electronics. If we source more materials from India and cut imports, it would bring down product costs by 25 per cent. We make 75 per cent of our products in India and the rest are imported. We have our manufacturing unit in Himachal Pradesh.

What is your expansion plan?
We will set up a factory in Jammu by 2017 to supply the north Indian region. We plan to set up plants in three cities in Andhra Pradesh, close to Kaveripattinam port, because southern India constitutes 50 per cent our market.