Daikin India targets 25% market share in split chamber air conditioner category by FY25

Japanese air-conditioning company Daikin, which currently holds the No. .

“In the separate room air conditioner category, we are clearly No. 1 now. We beat Voltas who was number 1. So far we have done better than Voltas this exercise. We will end the year with more than 20% market share by volume. In terms of value, the market share could be around 22%,” Daikin India director and senior vice president Kuldeepak Virmani told FE.

Daikin Airconditioning India, a wholly owned subsidiary of Daikin Industries, Japan, is a world leader in the manufacture of air conditioning systems for commercial and residential use. “At the end of last fiscal year, we had almost 18.5% market share by volume, and Voltas’ market share was around that. So we were neck and neck,” Virmani said, adding that the company would like to have “at least” 25% market share by volume in the split-chamber air conditioner category by FY25.

In the last fiscal year, the split-chamber air conditioner market size was around 6.2 million. And this fiscal year, the market is expected to touch about 7.5 million.

Daikin aims to post 25% year-on-year sales growth in June, supported by pent-up demand, a prolonged summer and a shortfall in monsoon rains. For this summer season (March-June 2022), the major AC experienced sales growth of more than 50% year-on-year compared to the same period last year.

The company said its monthly sales figures in India were currently higher than in the pre-Covid period, fueled by pent-up demand, a difficult summer and the growth of the overall economy. The company has so far raised air conditioner prices by more than 10% this calendar year due to an increase in metal prices, rupee depreciation and supply chain disruptions.

“After the Shanghai lockdown ended, the supply chain disruptions eased a bit, but the situation is still not back to pre-Covid levels. The availability of containers for imports is better now, but containers are still expensive,” Virmani said. The company imports, among other things, compressors and PCBs.

There are few countries in South Asia (Bangladesh, Sri Lanka, Nepal and Bhutan) and Eastern part of Africa (Kenya, Uganda and Tanzania) which are directly under the control of Daikin India, which is there responsible for sales operations. The Indian entity exports products to other parts of Africa and the Middle East. “The demand situation in Sri Lanka is currently very bad, there are hardly any sales there. Bangladesh was hit hard due to Covid, but now the demand is increasing. Nepal is also doing a bit better. After Covid, markets like Bangladesh, Nepal and East Africa started to do well. But they are small markets compared to India,” Virmani said.

Daikin Airconditioning India has the capacity to produce 1.5 million room air conditioners per year. Its two manufacturing plants in Neemrana, Rajasthan, are operating near full capacity.

The company has signed an agreement to purchase land in Sri City, Andhra Pradesh, for the establishment of a third manufacturing facility for air conditioners and components, under the recently announced PLI program by the Government of India in the air conditioner manufacturing space. In the first phase, there will be a production capacity of around 1 million air conditioning units. Production is expected to start from July 2023. In the second phase, the company plans to add another 1 to 1.5 million units. Depending on future requirements, the company could opt for a third phase mainly for the manufacture of components.