New Delhi: Godrej Appliances expects the indigenization ratio of components for products such as residential air-conditioners to go up to 75 percent in three to five years, with an increase in the local value addition. This would be helped by the production-linked incentive (PLI) scheme by the government for air-conditioners.
“We expect around 15-20 percent growth (in value terms) in the AC market this year in comparison to 2019,” Godrej Appliances Business Head and Executive Vice-President Kamal Nandi said.
Like other AC manufacturers, Godrej Appliances also went for a price hike recently to ward off inflationary pressure on the raw material inputs and hinted it may go up for a similar move again if the costs continued their northward push.
Godrej Appliance has around 5-6 per cent share of the residential AC market; while in the washing machine, it has around 10 per cent; and 15 per cent in refrigerators, said Nandi.
The company recently added a new manufacturing line for AC at its Shirwal, Pune-based plant, which would augment its production capacity of four lakh units per annum with an investment of around Rs 50 crore.
Besides AC, its Shirwal plant also manufactures washing machines, refrigerators, chest freezers, and medical refrigerators.
“We are still dependent on a lot of imported components such as compressors and electronic. We are working towards indigenizing them,” he said adding that over the next 3-5 years it would be able to increase the value addition from the current 35-40 per cent to 70-75 per cent.
Currently, components such as inverter PCBs and compressors are imported by the company.
Godrej Appliances has almost completed the indigenization process for its refrigerator and washing machine segments. A few electronic components are sourced from outside.
The Indian residential AC market is estimated to be around 7-7.5 million units per annum and over 15 companies compete in the segment.
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