Daikin India targets 25% market share in split room AC category by FY25

Daikin India targets 25% market share in split room AC category by FY25

20 Jun    Finance News

Japanese air-conditioning company Daikin, which is currently at the numero uno position in India’s growing split room AC market, is targeting a market share of “at least” 25% in volume terms in the category by FY25.

“In the split room ACs category, we are clearly No. 1 now. We have beaten Voltas which used to be the No. 1. So far, we have been doing better than Voltas this financial year. We will close the year with over 20% market share in terms of volume. Value-wise the market share could be around 22%,” Kuldeepak Virmani, director & senior vice-president, Daikin India, told FE.

Daikin Airconditioning India, a 100% subsidiary of Daikin Industries, Japan, is a global leader in the manufacturing of commercial-use and residential air conditioning systems. “At the end of the last fiscal, we had close to an 18.5% market share in terms of volume, and Voltas’ market share was around that. So, we were neck-and-neck,” Virmani said, adding the company would like to have “at least” 25% market share in volume terms in the split room AC category by FY25.

During the last financial year, the market size of split room ACs was around 6.2 million. And this fiscal, the market is expected to touch around 7.5 million.

Daikin is aiming to clock a sales growth of 25% year-on-year in the month of June, backed by pent-up demand, an extended summer and a deficit in monsoon rainfall. For this summer season (March-June, 2022), the AC major has witnessed over 50% y-o-y growth in sales compared to the same period last year.

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The company said currently its monthly sales figures in India are higher than that of the pre-Covid period, fuelled by pent-up demand, a harsh summer and growth of the overall economy. The company has so far raised prices of ACs by more than 10% this calendar year due to an increase in metal prices, rupee depreciation and supply chain disruptions.

“After the end of the Shanghai lockdown, supply chain disruptions eased a bit, but still the situation has not returned to the pre-Covid levels. Availability of containers for imports is better now, but still the containers are expensive,” Virmani said. The company imports compressors and PCBs, among other items.

There are few countries in South Asia (Bangladesh, Sri Lanka, Nepal and Bhutan) and the eastern part of Africa (Kenya, Uganda and Tanzania) which are directly under control of Daikin India, which is responsible for sales operations there. The Indian entity exports products to other parts of Africa and the Middle East. “The demand situation in Sri Lanka is very bad currently, there are hardly any sales happening there. Bangladesh was badly impacted because of Covid, but now demand is growing. Nepal also is doing slightly better. After Covid, markets like Bangladesh, Nepal and East Africa have started doing well. But these are small markets compared to India,” Virmani informed.

Daikin Airconditioning India has the capacity of producing 1.5 million room ACs per year. Its two manufacturing facilities in Neemrana, Rajasthan, are almost running at full capacity.

The company has signed a land purchase deal at Sri City, Andhra Pradesh, for setting up a third facility for manufacturing of ACs and components, as part of the recently announced PLI scheme by the Government of India in the AC-manufacturing space. In the first phase, there will be a capacity of producing around 1 million AC units. The production is expected to commence from July 2023. In the second phase, the company is planning to add another 1-1.5 million units. As per the requirements going ahead, the company could go for a third phase mainly for making components.

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