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Johnson Hitachi expects to resume growth from 2021, to increase indigenisation

After taking a hit in business this year due to the coronavirus pandemic, air-conditioner maker Johnson Controls-Hitachi Air Conditioning India expects to resume its growth journey from 2021 onwards when situation normalises, a top company official said.

The company reported over 70 percent drop in sales in the June quarter.

However, it is fully committed to the Indian market and confident over its long-term prospects and to grow ahead of the industry curve when the growth takes place, the official said.

Besides, the company is also endeavouring to promote and push ‘Made in India’ ACs and aims to reduce its component imports to almost to half and increase exports three folds in the next three years, Johnson Controls-Hitachi Air Conditioning India Chairman and Managing Director Gurmeet Singh told PTI.

The company expects to resume its growth journey from 2021 after a blip in the business in 2020 due to disruptions by COVID-19 and subsequent lockdown.

“It might take some time but I am hopeful that next year, we would go to 2019 plus level. Whatsoever has happenned in 2019, the market should do better in the 2021 calendar year,” Singh said adding “recovery might start in the month of December and January.”

Johnson Controls-Hitachi Air Conditioning India, which operates in the residential air conditioners, commercial air conditioners and home appliances segment, reported a revenue of Rs 2,197.37 crore in FY2019-20.

According to Singh, there is enough space into the Indian AC market, which has only six per cent penetration level. Besides, affordability would also be increasing, he added.

“Though we have seen a blip, loss of income and jobs and other factors but the base of the economy is intact. We have seen revivals in sectors as in automobiles and I am pretty sure that we would see the revival of growth in this sector also,” he said.

Singh further added that the growth patterns may not change. “In a recent report we have submitted to the government as an industry, we are expecting sales to go almost three times in the next eight years or so and Hitachi would be fast pacing the industry,” he said.

The company is working with the Indian government to reduce the import of critical components and is also encouraging its overseas vendors to set up factories in India to support an “Aatmanirbhar Bharat”.

“Our idea in the next three years time is to reduce our imports by half and increase our exports from three times of today. We have started working with many (component) manufacturers in India,” Singh said.

It is working on indigenisation of products right from PCBs to compressors. It has formed associations with MSMEs and SMEs here to promote domestic manufacturing and indigenisation of raw materials and components.

“We are working with associations, we are working with the government and also working with our overseas vendors, who can come and put their factories here in India for the critical components, which are imported from outside,” he added.

When asked about components that the company is looking to localise, Singh said, “There are motors, PCB boards and largely compressors. These are the things which we are intending to procure from India.”

There are multiple small items, which are being imported from neighbouring markets as China and South East Asia.

“We were importing right now primarily because of the cost side (advantage). Now we would be doing hand-holding some of these vendors and bring them to India,” he said.

According to him, there would be some cost increase in the initial years but it would be compensated after they master the technologies and cost comes down.

“Once the cost comes down, it would help us in exports,” he added.

While talking about export, Singh said that presently near 5 per cent of its revenue comes from exports, which is mainly to neighbouring SAARC, South Asia and some Middle East markets.

“We are also looking at the Middle East and African markets for export. We are now poised to enter the African market, where we are appointing our new distributors,” Singh said adding that the stringent energy-efficiency norms of India and BEE star ratings are ensuring that India is producing the highest level of products. Johnson Controls-Hitachi Air Conditioning India is a 60:40 JV between US-based Johnson Controls and Japanese company Hitachi.-Money Control

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