BackDaikin in advanced talks to open second plant in India
Daikin wants to expand manufacturing capacity in India from 500,000 to 1 million room ACs per annum
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New Delhi: Daikin Airconditioning India Pvt. Ltd, a 100% subsidiary of Japan’s Daikin Industries Ltd, is in advance talks with several state authorities to open its second manufacturing plant in India, a top company executive said on Wednesday.
The company, which already manufactures 90% of the air-conditioners (ACs) locally, wants to double its manufacturing capacity to take imports to 0% and make India an export location for countries such as Sri Lanka, Bangladesh and Nepal.
“We are going in the direction of 100% manufacturing here," said Kanwal Jeet Jawa, managing director, Daikin Air-conditioning India. “We might look at southern India for our second plant," he added, although the company is evaluating Uttarakhand and Gujarat, too.
The company, which has a manufacturing unit in Neemrana in Rajasthan, wants to expand its manufacturing capacity in India from 500,000 to one million room ACs per annum.
“Our next plant will have larger capacity than the current one," said Jawa. He is looking for a larger area, too. Daikin’s 40-acre facility in Neemrana is currently running at full capacity, producing 500,000 room ACs, 20,000 VRV (Variable Refrigerant Volume), 1,800 chillers and 6,000 ducted ACs a year.
VRVs, chillers and ducted ACs are products sold to corporate entities, institutions and public places such as shopping malls. The company currently gets 70% of its business from residential ACs and the rest from selling to businesses.
The company did not disclose the estimated investment in the new plant, but said that ₹ 330 crore was sanctioned late last year for expansion of capacity in current facility, infrastructure development, opening more Daikin plazas, and for brand building.
Daikin in India expects to increase its revenue to ₹ 2,500 crore from ₹ 2,200 crore in the fiscal year 2013-14, Jawa said. The company will also increase its dealer network to 2,650 during this period. It currently has 2,500 dealers and 190 exclusive showrooms.
The company, which competes with LG Electronics India Pvt. Ltd, Voltas Ltd, Carrier Midea India and Panasonic India, expects to further expand its reach into Tier II-III cities by launching a new range of products and by entering other sales channels such as e-commerce.
At the launch of its next-generation VRV technology in New Delhi, Daikin said it will open a subsidiary of its India operations in Sri Lanka within next three-six months in order to start exporting to that market. “We plan to supply ACs to Sri Lanka from India as we have a free trade agreement with the country," said Jawa. Currently, the company supplies ACs to Sri Lanka from a manufacturing facility in Thailand.
The company eventually wants to supply to markets such as Bangladesh and Nepal from India rather than from China.
India sold about 3.3 million AC units in fiscal 2013-14 period. Currently, at 28 million ACs in the country, their penetration rate is about 3-3.5%. According to the Consumer Electronics and Appliances Manufacturers Association, the AC numbers would reach 45-50 million in next two-three years.
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