Fujitsu''s General to invade India
By Venkatachari Jagannathan | 18 Dec 1999
Though ETA Engineering officials refused to talk about the project as joint venture agreement is yet to be signed, it is learnt that the 'O General' brand will enter the Indian market by March 2000. The Japanese company will get imported kits of the ACs assembled at the Pondicherry plant where ETA Engineering currently manufactures air handling units, chillers and fan coil units for central air conditioning systems. Full scale manufacture is expected to commence from December 2000 at a new plant. Currently ETA Engineering has an estimated Rs.120-crore turnover.
If everything goes according to plan, Fujitsu General will become the fourth Japanese air-conditioner company to enter India after Hitachi, Matsushita and the $4.5-billion Daikin Industries. Fujitsu's will be the second to locate its plant in south India.
In November 1999 the $60-billion Matsushita Electric Industrial Company, manufacturer of the well-known 'National' air-conditioners, commissioned its Rs.60-crore factory at Irrungattukottai near Chennai.
Matsushita has formed Matsushita Air Conditioning India Ltd, a joint venture with the Videocon group's Shri Dhoot Trading Agency. The Rs.35-crore equity of the venture will be shared between Matsushita Electric and Shri Dhoot in the raito of 70:30.
Matsushita Electric started selling its National ACs in February 1999 by assembling imported kits. Currently 80 per cent of the components are imported. According to officials about 15,000 units have been sold till date. Though the new plant has a capacity to roll out 1 lakh units, officials say that the company would make 25,000 units this fiscal and then scale up production.
Matsushita Air Conditioning India will initially focus on 1-tonne and 1.5-tonne window air-conditioners and introduce split ACs later. Meanwhile Daikin Industries has joined hands with the New Delhi-based Sidddarth Shriram group in a new joint venture company called Daikin Shriram Airconditioning to manufacture the 'Daikin' brand of ACs. Daikin will hold 80 per cent of the equity of the new company, and the balance will be held by Siel, which has the option to raise its holding to 26 per cent.
Last week, the Bangalore-based Trac Fujico launched its Hyundai brand HFC-free air-conditioners. Daikin Industries is also a major in that segment. Daikin Industries will also bring in its multi splits and central air conditioning systems. In short, the windows and split air-conditioners market will soon witness some hectic activity.
Estimates put the size of windows and splits segment ranges between 3.5 to 4 lakh units per year. This market is estimated to be growing 15 per cent a year.
The entry of multinational brands will benefit consumers, in terms of pricing and quality, but will make life difficult for earlier players in the industry. The industry is already smarting under the onslaught of Korean companies like LG Electronics and Samsung.
Bemoans an Amtrex-Hitachi dealer, "The Koreans are adopting aggressive pricing strategy. While our 1.5-tonne Hitachi air-conditioner with a five-year warranty is priced at Rs.28,900, LG Electronics prices its similar machine around Rs.25,000." And LG offers higher dealer margins too, he adds. According to this dealer, with dealer margins at a "pathetic" Rs.250 per unit, Amtrex-Hitachi dealers are planning to take up the issue of remuneration with their principal.
According to him, the window and split
air-conditioner market will slowly be captured by new foreign brands and the unorganised sector, forcing Indian-controlled companies to focus on central air-conditioning systems.
"It's a matter of time before multinationals enter this segment too," he says. The only option for domestic companies like Voltas and Blue Star is to reduce their overheads and match the prices of foreign brands.
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