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A Promising Summer Ahead!

The industry is looking forward to a hot summer. The India Meteorological Department has forecast normal to above-normal heat wave conditions over core heat-wave zone of the country, with the average temperatures likely to be above normal by more than 1 degree Celsius. The weather department has also established the development of rain-busting El Nino over the Pacific Ocean, which will persist till June this year, and it could negatively impact the June to September southwest monsoon season.

With fundamentals intact and in place, that should see the industry at a double-digit growth this fiscal, at about 15 percent or so. This will be a big relief, as the industry has had weak sales for the last two seasons.

India is one of the major developing countries with huge middle-class population base, and rising per capita income. In comparison to other developing countries, the market penetration of air conditioners is still very low in India. The industry is poised at an inflection penetration of 7–8 percent, and I see it exploding over 10 percent. Developed nations like Japan, the US, Australia, and China are all above 90 percent penetration.

While the HVAC products are becoming smarter, economical, and more eco-friendly, brands are also investing substantially on branding. Higher disposable incomes, shorter replacement cycles, increasing electrification, availability of financing schemes, and demand emanating from Tier-III and Tier-IV cities are promising drivers. The customer has better awareness too and exhibits preference for superior technology and power efficiency.

We at Daikin India are gearing up for an 18–20-percent growth in 2019-20. We have set ourselves a strong target of 10 lakh room air conditioners, thereby increasing our market share to about 19 percent. With an increased distribution and sales-service network, robust network of 6400 sales outlets, major brand building in Tier-III and Tier-IV cities, and our track record of a higher than industry average growth since 2009, our team is confident.

Geographically, since mid-March, sales in the northern states of India have started picking up, and I expect it to be a good, long summer for Daikin. With the air conditioner now accepted as a necessity, while 45 percent contribution is from the metros, it is the non-metros where we are looking to strengthen our presence in. With infrastructure projects and housing sector seeing more traction, Daikin is witnessing a pan-India growth.

As pioneers of inverter ACs across the globe, we are confident that inverterization in the Indian market will lead the way for Daikin dominance in this product category. Continuing to bring true value addition to our customers, two recently launched statet-of-the-art products – the Wi-Fi-enabled air conditioners and advanced anti-corrosion models – are giving an edge to our brand. The IoT-enabled smart air conditioners are also compatible with Google Home and Amazon Alexa.

With India now gaining reliable manufacturing reputation across the globe, the third Daikin facility will serve the growing local consumption and exports to SAARC countries, East Africa, and the Middle-East. The third factory will optimize our cost structure and make us more export-oriented and efficient. Countries with weather patterns like ours will be able to take advantage of the Indian production, price and reduced time delivery owing to multiple connectivity options.

I am excited and extremely bullish for FY20!

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