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Blue Star ees 9% pie of Indian room AC marketBS Reporter / Chennai/ Hderabad Januar 24, 2012, 0:12 IST

Blue Star Limited, the countrys largest central ai r-conditioning company, is

expecting the downtrend in the commercial construction activity to impact its

financials in the next two quarters, according to B Thiagarajan, president (air-conditioning and refrigeration products group).

“The contracting part of our business (air-conditioning of projects to shopping

malls, airports, hospitals and large office complexes), which accounts for 40

per cent of our revenues, is undergoing a difficult time and there is a m ajor 

slowdown. We do have cost overheads there. It will be so, probably for two

more quarters," he told mediapersons here on Monday.

Blue Star incurred a net los s of Rs 11.01 crore in the half-year period of the

current financial year, as agains t a net profit of Rs 75.79 crore during the

sam e period a year ago, primarily on account of lull in contracting bus iness.

The electro-mechanical projects division and packaged air-conditioning

business together accounted for 64 per cent of its revenues in the secondquarter of FY12, a decline of 19 per cent.

“In 2011-12, commercial construction activity slowed down. Builders started

delaying the projects and we incurred losses because of those long-

gestation periods . We expect growth in the market only in 2014,” Thiagarajan

said.

Launching their latest room air-conditioners (RACs) in Andhra Pradesh on

Monday, taking its home A-C portfolio to 45, Thiagarajan said the company

commanded a 30 per cent share of the packaged air-conditioners market

and 25 per cent in the refrigeration and cold storage segment.

“We have improved our market share in the RAC segment from 5.5 per centto 7.5 per cent and want to move towards the 9 per cent range this year and

even to 15 per cent in the coming years, owing to increasing disposable

income, residential demand and harshness of the summer,” he added. The

company already has a market share of 15 per cent in Andhra Pradesh,

which it plans to take it to 17.5 per cent this year and 20 per cent in the year 

after, he said.

Of the 85 m illion units RAC market globally, China accounts for 40 m illion, the

US 11 million, Japan 6 million and India 3.1 million. Thiagarajan said market

research figures indicated that the Indian RAC market would touch 7 m illion

units by 2013-14.

Replying to a query, Thiagarajan said the company would spend Rs 20 croreon television comm ercials and other promotional activities this year and that

it was mulling a price hike of 10-15 per cent on its products in the ensuing

summer season.

Blue Star Limiteds scrip rose 1.44 per cent to end the trade at Rs 172.55 on

the BSE on Monday, over the previous close of Rs 170.1.