Daikin: In search of new markets

While the air-conditioner market this year in India has been sluggish compared to last year, Daikin Airconditioning India, a 100 per cent subsidiary of Daikin Industries Ltd Japan, is weaving an expansion plan. It is looking for new markets in the tier 2 and tier 3 cities. On its radar are Indore, Bhopal, Ujjain, Bhubaneshwar, Jaipur, Patna, Ludhiana, Jalandhar, Amritsar, Lucknow, Vizag and Kochi. The company recorded a turnover of Rs 1,200 crore plus in FY 2011 and is estimating that this year sales will grow 50 per cent compared to last year.

Daikin believes these markets offer it great potential to grow. “There are several factors favouring the Indian air-conditioner market growth-the changing lifestyles, the rise in disposable incomes, the drop in prices of ACs and above all, the ease of availability," says Kanwal Jeet Jawa, managing director, Daikin Airconditioning India. Daikin India will take its latest line of inverter and BEE star-labeled range of products in the smaller markets.

The overall AC market in India stands at Rs 10,000 crore plus and Daikin’s share in that was about 11 per cent last year. With new markets under its belt, Daikin expects its market share to grow to 15 per cent this year.

Last year, Daikin cut prices for its products to compete in the mass market segment with brands such as LG, Samsung and Voltas. It launched 14 models for homes and its starting model was priced at Rs 26,000, a tad higher than similar products from LG and Samsung. Other aggressive players in the segment are Panasonic, Haier, Blue Star, Godrej, Videocon, Whirlpool and Carrier.


Daikin’s manufacturing plant at Neemrana, Rajasthan, will be functional towards the end of this calender year and it will cater largely to the domestic market. The company claims it is the most advanced integrated plant in India to manufacture residential ACs. “Our new manufacturing plant at Neemrana in Rajasthan has the capacity to manufacture 20,000 VRV units (VRV is a system developed and designed by Daikin and means variable refrigerant volume; it is an energy saving way to heat and cool all types of buildings with minimum installation time or disruption) and 1,800 chillers and will produce only HFC refrigerant-based products (HFCs or hydrofluorocarbons are non ozone depleting and the refrigerant of choice in a wide range of new refrigeration and air conditioning equipment). This is in accordance with the worldwide concern for environment friendliness," says Jawa.


As far as the brand visibility is concerned, Daikin has been investing aggressively on outdoor campaigns, print and below-the-line activities for the last two years. The company is looking to invest about 3-4 per cent of its turnover in supporting its new initiatives. Simultaneously, Daikin India will also try to improve its retail footprint in India by expanding its national dealership network to 2,000 from the current 1,000. It plans to unveil 100 new Daikin Exclusive Solution Plazas across India. It will also concentrate on localisation to catapult itself among the top three AC players in India by 2015.