Godrej Appliances eyes 20 pc of 5-star, inverter AC

Company's 5-star category accounts for almost 22 per cent of Rs 10,000 crore AC market.

Mumbai: Godrej Appliances, the consumer durables division of Godrej Group, is aiming to capture 20 per cent market share across the 5-star and inverter AC segments by 2018 on the back of new launches.

"In the 5 million unit AC market, the five star plus category is growing in excess of 40 per cent," Godrej Appliances Business Head and EVP Kamal Nandi said.

The 5-star category accounts for almost 22 per cent of the Rs 10,000 crore AC market, while inverter ACs contribute 8 per cent to the industry sales. The company enjoys a 10 per cent market share in the segment at present.

"The penetration level of air conditioners is about 4-5 per cent. With every year becoming hotter due to global warming, the consumption of air conditioners is going up. It is the fastest growing segment for last four or five years...With government focus on rural economy that segment of consumers will start adopting this product," Nandi said.

The company will be launching 28 new ACs this year and has doubled its ad spends for the category this season to over Rs 15 crore from last year.
ACs contribute around 24 per cent of the company's turnover at present and in the next two years it expects the share to increase to 35-36 per cent.

It expects to clock a revenue of Rs 3,700 crore this fiscal and for the next fiscal year it is targeting Rs 4,500 crore. The company expects the smaller towns and rural market to contribute to the growth of the company going forward.

"We have a lot of products for the rural markets. We expect the growth momentum to grow. With growth coming more from there, those segments will accelerate from there. Given the measures the government is taking to boost rural economy, I would expect a 1.2 to 1.3 times growth from these markets,"
he said.

The metros contribute to 65 per cent of the company's turnover while the remaining from tier II, tier III, tier IV, R1 and R2 markets. The company is also planning to expand its exclusive brand outlets in these markets from 70 at present to 200 over the next three years.

The consumer durables industry was impacted by demonetisation but Nandi expects the growth to return from this month.

"For the first eight months till October, industry was growing at 36 per cent. The industry de-grew by 40 per cent in November. In December it de-grew by 15 and in January by 3 per cent. From February we are seeing a path of recovery. Our estimate is that February should be flat over last year and from March onwards we should get growth," he said.

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