Air Conditioning Industry in India

Presented by: Pallavi J. Bhojak Rahul Hirvey

History
In 1902 the first modern electrical air conditioning was invented by William Carrier in Syracuse, New York

In 1820 British Scientist Michael Faradey discovered that compressing and liquefying ammonia could chill air

Carrier Corporation was the major producer in initial states of modern air conditioners

Air Conditioners - Product tree

Air Conditioning Products

Non-Ducted products

Ducted products

Windows ACs

Cassette ACs

Mini-Splits

Central Plants

Packaged ACs

Ducted splits

Key players and their market share in both segments

LG India Samsung India ACs Voltas AC India Godrej Bluestar India ACs Carrier ACs Onida AC Hitachi AC Kenstar Whirlpool

Market share in all segments

Sales

Carrier LG India Samsung

Bluestar
Voltas Onida Others Kenstar

THE INDIAN AIR-CONDITIONING INDUSTRY IS A

Rs 2,790 CRORE MARKET

Volume 540k nos 220k nos

Segment 1 2 3 Window ACs Mini Split ACs

Value Rs 1200 crore Rs 730 crore

Applications Homes, Shops Homes, offices, shops, showrooms

Ducted Split and Packaged AC

Chillers and Central Plant

Rs 400 crore
Rs 460 crore

216k tons

Commercial establishments
Industrial, institutional and large commercial

272k tons

Rs 2,790 crore
Industry investment in line with potential resulting in surplus capacity leading to oversupply and price wars
Source:Francis Kanoi; Industry estimates

Porters Five Force model

Threat of new entrants -Most current players are global players

-New entrants will need to invest in brand, technology, distribution

Competitive rivalry Supplier power Indigenous supply base limited most raw material are imported -Number of well established players; -Good technology capability and technology -Many untapped potential markets Buyer power -Multitude of brands across price points wide variety of choice for customers

Threat of substitute -Unbranded products and cheaper imports could enter the market

Key Success factors

Taxation Structure: Reduced excise duty levied helped organised sector compete with unorganised sector. In 2000, rate increased from 30% to 32%, MRP based system saved the fate of AC industry. Shift of demand; market conditions influence corporate segment demand, changing life style and climate, made demand from household segment balance the ratio. Climatic conditions: increased consumer need for ACs overall.

 Non- ducted ACs : Demand for mini-splits have increased due to lower base in comparison to window ACs Prices of ACs have reduced due to heavy competition, as this industry got the attention. With vast Marketing and Advertisement investments for building both product and brand, market expansion was inevitable. Competition: as with other consumer durables, in initial intensity of competition, more cash invested by existing and new players leading to drop in prices, fuelling demand. Latent demand: long term from Indian households led to MNC making beeline to set up base in India.

Key drivers
ACs come under the category of HVAC equipments Construction Spread of automotive sector Per capita income and market fluctuations

Cooling - changing with time..

Nearly 60% of the demand for AC came from corporate from 2000 Gradual rise of household demand from 2001study by Confederation of Indian Industry Demand for non-ducted products- from both household and corporate; ducted productsmainly from corporate. 2009 Dec, the share from residential segment was 16% , from corporate sector 49%, from automobile industry 19% & remaining from institutions.

THANK YOU.