Air conditioning and commercial refrigeration major Blue Star Ltd on Tuesday outlined a three-pronged strategy for the next phase of growth and to improve market share from 12.5 per cent in FY19 to 15 per cent in the room AC market in the next four years.

The company plans a brand repositioning, aggressive push into small towns and a new range of innovative products.

Blue Star is now repositioning its brand to “Premium-Yet-affordable” from the earlier “Premium” positioning in the market. The move has been necessitated in line with its strategy of making it affordable for people in small towns. This move will be supported by Cricket star Virat Kohli who has been roped in as brand ambassador.

“Big growth is happening in Tier 3, 4 and 5 towns with a lot of first-time buyers. It is a conscious call and we will go ahead with this positioning,” B Thiagarajan, Managing Director, Blue Star Ltd said here, while unveiling a new range of room ACs.

The company is focusssed on boosting AC sales in Tier 3, 4, 5 towns, which have now emerged as key growth centres with a contribution of 60 per cent to total sales.

For this strategy, the company has come out with a range of 3-star inverter split ACs that come with a starting price of ₹31,990. The 1.5 tonne 3-star split AC will be priced at ₹37,9990. Earlier, the starting price of Blue Star room AC was in the ₹34000-35,000 range. Thus, brand repositioning and a new set of affordable ACs, with the brand campaign of Virat Kohli, will help.

Room AC market in India is estimated at 5.5 million units in India and is expected to grow at a CAGR of about 10 per cent due to low penetration and supported by a vast range of affordable products.

Sri City

Thiagarajan said the company was planning to go ahead with its proposed factory at Sri City near Chennai to avail itself of the 15 per cent manufacturing incentives. The initial investment will be ₹120 crore and the unit is expected to be commissioned by the end of 2021. It may pump in another ₹120 crore in the second phase. The factory will have a capacity of half a million units.

New range of products

In addition to affordable range of Room ACs, the company has also introduced a range of inverter split ACs with new features such as air purifier technology, WiFi option, higher cooling systems, iRest (a unique fuzzy logic function), customised operating modes, among others in the 5-star category.

Blue Star pegs its growth in room AC market at 17 per cent for this fiscal, while the industry is expected to grow at 12 per cent. The company expects its market share to improve to 12.75 per cent by the end of FY20, which will see the company selling 6.75 lakh units.

Coronavirus impact

Thiagarajan indicated that production may get impacted during April as a consequence of Coronavirus outbreak in China. Though most of the company’s parts are localised, its suppliers were sourcing some parts from China.

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