Daikin Airconditioning, India, is eyeing a turnover of at least $2 billion during the financial year 2024-25, backed by an exponential growth of domestic market, greater export opportunities and the government’s supports under Aatma Nirbhar Bharat and the PLI scheme.
The new plant at Sri City, Andhra Pradesh, for manufacturing of air-conditioners and components as part of the PLI scheme is expected to be ready for commercial production by this year-end. It will expand the company’s room ACs production capacity by one million units, and help it grow exports in existing and new markets.
“The factory that we are putting up at Sri City will further strengthen our position in helping the growth of domestic market and at the same time, it will become an export hub. We are the largest investor in the PLI scheme. The construction of the plant is almost getting over. Production of compressor at the plant will start somewhere around July-August, 2023, while room AC production will start around September-October. For getting the PLI benefit, we have to have production from the new plant next year and we are on schedule, on time and on cost,” Kanwaljeet Jawa, chairman and MD at Daikin Airconditioning India, told FE.
The company, a 100% subsidiary of Daikin Industries, Japan, is investing around `1000 crore during the first phase for the new 75-acre plant. This plant will be the company’s third manufacturing base after facilities at Neemrana, Rajasthan. Total production capacity of the two plants in Neemrana for room air-conditioners stands at 1.5 million units per year.
“Our new factory at Sri City will have an additional capacity of 1 million units per annum. So essentially, by the next calendar year, we will have a total capacity of 2.5 million room air-conditioners,” Jawa informed, adding the company currently has around 18-19% market share in the country’s split room AC category. It has around 12,000 dealers across India.
Daikin is hoping to be a billion-dollar company in India by this fiscal-end. “We will be the first air-conditioning company which will be crossing $1 billion turnover this (fiscal) year. We are very close to that. Just one-and-half months left. We are quite hopeful that we will be crossing the $1 billion. For FY25, our plan is to garner at least $2 billion turnover as the Indian market is going to grow exponentially. India is still a very under-penetrated market with the penetration level remaining at only 5-7%,” the MD said.
According to the company, the country’s AC market will grow manifolds in the next 10 years. The market is expected to grow to about 40 million room air-conditioners by 2029 from the current of about 8-9 million units.
The air-conditioner maker is planning to export ACs and components from its new facility to Middle Eastern and African countries, among others. It is also looking at North America. “We have made very strong inroads into Bangladesh, Nepal, Sri Lanka and East Africa. We are also suppliers to our Dubai office,” Jawa added.