HomeBusiness NewsCommercial refrigeration market will double to ₹10,000 crore in four years: Blue Star MD B Thiagarajan
Commercial refrigeration market will double to ₹10,000 crore in four years: Blue Star MD B Thiagarajan
The penetration level for air conditioners in the residential sector has been lower, at around 7.5 to 8%, pointed out Blue Star MD B Thiagarajan. More than 92% are first-time buyers and over 50% are buying through consumer finance.
The Indian commercial refrigeration market will double to ₹10,000 crore in 4 years, as per Blue Star MD B Thiagarajan. Currently, the market size is between ₹4,500 crore and ₹5,000 crore and by FY28, it is expected to cross ₹10,000 crore.
Thiagarajan said, "But the question is when India will start consuming commercial refrigeration and when the integrated cold chain infrastructure will fully develop. Commercial refrigeration has been growing well; it has taken off, and in the coming years it will grow further." Blue Star is maintaining around 35% market share and is looking forward to improving it further.
Commenting on expectations from summer 2024 the Blue Star MD said, "Summers are like Diwali for the industry, not only (for) Blue Star, but for both air conditioning and commercial refrigeration business, summers are big. Close to around 40% of our annual profits come during this season. Last year was a bad summer, it rained a lot. This time around, the predictions are that it will be a harsh summer, the indication so far has been that it is indeed so."
He also said that dealers have stocked up very well, and to build up this summer, March was a very huge month for the industry and the demand is holding.
Thiagarajan feels that an aspirational middle class is driving growth for the company. In the residential segment, the penetration level for air conditioners has been lower, at around 7.5 to 8%. He highlighted that over 92% are first-time buyers, more than 50% are buying through consumer finance. 80% of the products sold are entry level models, more than 65% are from tier 3, 4, and 5 towns.
He said, “We are able to maintain the prices without deteriorating margins. Both for air conditioners and commercial refrigerators, this is a golden era." He believes that the next five years will be an orbit-shifting period.
Blue Star has made significant investments in the past couple of years and is expected to do so further. Thiagarajan pointed out that there will be an additional investment in air conditioning because cities are witnessing modular expansion at 3 lakh per unit per year. He elaborated, "In FY24, it was 3 lakh, in FY25, it will become 6 lakh and in FY26, it will become 9 lakh, so on and so forth. If it goes up to 1.2 million, that calls for an investment.
The company invested in the less than 300 litre capacity last year as a part of the localisation initiative. In FY27, deep freezers will require a new investment, likely in North India, added Blue Star MD.
Thiagarajan feels that a good monsoon outlook will be good for the industry. "Festival season sales always depend on the monsoon. If 65% of sales are coming from tier 3, 4, and 5 towns in India, monsoon is a very important factor. The monsoon drives consumption in rural areas," said Thiagarajan.
When asked about the highly anticipated visit of Tesla founder Elon Musk, Thiagarajan said, "Not just out of Elon Musk, the manufacturing sector is growing in a very rapid manner in India. Infrastructure investments will continue and if the overall economy is going to be there, it is good for India. This is like India's decade and for companies such as ours, we were waiting for this period. It's the right moment for us to excel. When there is a big event or a big moment, everybody will raise their levels as well."
Blue Star launched a new range of energy-efficient deep freezers from 60 to 600 liters on Thursday. These deep freezers are designed to work even at 47 °C ambient temperatures. The deep freezers start from ₹16,000 onwards.
Thiagarajan said, "But the question is when India will start consuming commercial refrigeration and when the integrated cold chain infrastructure will fully develop. Commercial refrigeration has been growing well; it has taken off, and in the coming years it will grow further." Blue Star is maintaining around 35% market share and is looking forward to improving it further.
Commenting on expectations from summer 2024 the Blue Star MD said, "Summers are like Diwali for the industry, not only (for) Blue Star, but for both air conditioning and commercial refrigeration business, summers are big. Close to around 40% of our annual profits come during this season. Last year was a bad summer, it rained a lot. This time around, the predictions are that it will be a harsh summer, the indication so far has been that it is indeed so."
He also said that dealers have stocked up very well, and to build up this summer, March was a very huge month for the industry and the demand is holding.
Thiagarajan feels that an aspirational middle class is driving growth for the company. In the residential segment, the penetration level for air conditioners has been lower, at around 7.5 to 8%. He highlighted that over 92% are first-time buyers, more than 50% are buying through consumer finance. 80% of the products sold are entry level models, more than 65% are from tier 3, 4, and 5 towns.
He said, “We are able to maintain the prices without deteriorating margins. Both for air conditioners and commercial refrigerators, this is a golden era." He believes that the next five years will be an orbit-shifting period.
Blue Star has made significant investments in the past couple of years and is expected to do so further. Thiagarajan pointed out that there will be an additional investment in air conditioning because cities are witnessing modular expansion at 3 lakh per unit per year. He elaborated, "In FY24, it was 3 lakh, in FY25, it will become 6 lakh and in FY26, it will become 9 lakh, so on and so forth. If it goes up to 1.2 million, that calls for an investment.
The company invested in the less than 300 litre capacity last year as a part of the localisation initiative. In FY27, deep freezers will require a new investment, likely in North India, added Blue Star MD.
Thiagarajan feels that a good monsoon outlook will be good for the industry. "Festival season sales always depend on the monsoon. If 65% of sales are coming from tier 3, 4, and 5 towns in India, monsoon is a very important factor. The monsoon drives consumption in rural areas," said Thiagarajan.
When asked about the highly anticipated visit of Tesla founder Elon Musk, Thiagarajan said, "Not just out of Elon Musk, the manufacturing sector is growing in a very rapid manner in India. Infrastructure investments will continue and if the overall economy is going to be there, it is good for India. This is like India's decade and for companies such as ours, we were waiting for this period. It's the right moment for us to excel. When there is a big event or a big moment, everybody will raise their levels as well."
Blue Star launched a new range of energy-efficient deep freezers from 60 to 600 liters on Thursday. These deep freezers are designed to work even at 47 °C ambient temperatures. The deep freezers start from ₹16,000 onwards.
(Edited by : Keshav Singh Chundawat)
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