A.O. Smith Aims To Break Even Soon In Water Heater Segment

A.O. Smith is looking to break even in its core category (water heaters) in India by 2019.

However, overall India operations which include its water purifier business are yet to break even. Incidentally, the country continues to be amongst the fastest growing markets for the company.

A.O. Smith entered India in 2008, and made its first phase investment with the setup of a water heater manufacturing facility at Bengaluru in 2010.

4 years later, it established a water purifier manufacturing line. It also has a full-fledged R&D team here.According to Parag Kulkarni, MD, A.O. Smith is still in an “investment phase”.

“We are in an investment phase. However, the water heater segment is expected to break even next year. It will be reporting a profit before tax,” he told.

Till date, A.O. Smith India has made an investment of Rs 500 crore here across its two verticals, water heater and water purifier and set up a manufacturing unit at Bengaluru. The facility has an annual capacity of making 10, 00,000 water heaters and 3, 50,000 water purifiers.

The company reported a turnover of Rs 95 crore, Rs 121 crore, and Rs 169 crore for calendar years 2015, 2016 and 2017.The water heater market in India is pegged at Rs 1800 crore while the water purifier market (which includes reverse osmosis tech, ultra-violet tech and others) stands at Rs 4500 crore.

Focus on purifiers

“While, the first phase of investment in India focused on the water heater business; the second phase is about water purifiers,” Kulkarni said.

According to him, A.O. Smith has doubled its water heater business and is now looking at a pan-India expansion for the water purification business.

“Encouraged by the consumer response, we are now taking our distribution network (for water purifier) to 46 cities,” he said adding that the product portfolio too will be ramped up. — The Hindu Business Line

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