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Daikin plans local assembling plant for airconditioners

Partha Ghosh

Japanese air-conditioning major Daikin Industries Ltd is planning to set up a greenfield facility in the country for assembling its air-conditioners.

Two years ago the company had acquired the AC manufacturing facility of Siddharth Shriram-promoted Siel Ltd.

The proposed plant is likely to be set up during the fiscal 2003-04 with an investment of around Rs 500 million, Rajnish Ohri, general manager (marketing), Daikin Shriram Airconditioning Ltd, said. Daikin Shriram is a 80:20 joint venture with the Siel Ltd.

"We are clear that the plant will be set up once our turnover crosses Rs 2 billion. A final decision will be taken by the parent," he added.

Daikin registered a turnover of Rs 840 million in 2001-02. It expects to clock Rs 1.50 billion sales in the current fiscal. It is also expected to make a marginal net profit during the fiscal ended March 31, 2002.

Ohri said the focus of the new plant would be on assembling the company's new range of air-conditioners.

However, the company will continue to source compressors and electronic inputs from Japan and other overseas subsidiaries.

Currently, the company is assembling its air-conditioners in the Silvassa factory: compressors up to 2 tonne capacity are being imported from subsidiaries in Japan and Thailand, and compressors with capacity of more than 2 tonne are being imported from Japan.

Daikin is also expanding its exports portfolio. Its ACs have demand in Sri Lanka, Nepal, and Bangladesh. Last year, out of 10,000 units produced by Daikin Shriram, 1,000 units were exported. The company also sells the Shriram brand of air-conditioners, which will cease to exist this year, to the government. However, water coolers under this brand will exist.

In fact, during the last year, of the Rs 920 million turnover (net of taxes), the Daikin brand (of ACs) contributed Rs 650 million, while the Shriram water cooler business contributed Rs 220 million.

"We are in the light, commercial AC business. We target the residential buyers who are looking for better air-conditioners and the commercial segment," Ohri said.

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