As the demand for air conditioners continues to soar, Blue Star is poised to implement a price increase of 4-5% this April, driven by rising metal costs and fluctuations in the Indian rupee. Managing Director B. Thiagarajan confirmed this adjustment during a recent announcement, indicating that prior increases of 3-4% in February were necessary to manage escalating production expenses.
Rising Costs and Market Dynamics
Thiagarajan highlighted that financial market volatility typically leads to a spike in commodity prices, particularly metals such as steel and copper. He noted, “With the current market fluctuations, we are witnessing a notable increase in metal prices, which directly impacts our costs.” Furthermore, he pointed out that the weakening rupee adds another layer of complexity, necessitating a price adjustment for consumers.
- Current Price Increase: 4-5% in April
- Previous Increase: 3-4% in February
- Key Factors: Rising metal prices, currency fluctuations
Supply Chain Challenges Ahead
Looking ahead, the industry may encounter a shortage of compressors, a critical component in air conditioning units. However, Thiagarajan expressed optimism that by 2028, India could achieve self-sufficiency in compressor production, thanks to the Production-Linked Incentive (PLI) scheme.
In a push to enhance production capabilities, Blue Star is investing approximately ₹200 crore to expand operations at its Sri City facility, which is one of three production sites, alongside two in Himachal Pradesh. Currently, the Himachal plants are operating at full capacity.
- Investment for Expansion: ₹200 crore
- Production Facilities: 3 (2 in Himachal Pradesh, 1 in Sri City)
- Capacity Goals: 1.4 million units this year, increasing to 1.8 million by FY27
Anticipating Growth in Sales
Despite last year’s impressive growth—where the AC market expanded by nearly 60%—Blue Star remains optimistic about a 25-30% increase in AC sales this summer. The company aims to boost its market share from 13.9% to 14.3% by FY26, alongside investing ₹35 crore in research and development to drive innovation.
- Expected Sales Growth: 25-30% for the upcoming summer
- Market Share Goal: From 13.9% to 14.3% by FY26
- R&D Investment: ₹35 crore
New Product Launches and Features
On Thursday, Blue Star unveiled 150 new models of room air conditioners, including a premium range aimed at tech-savvy consumers. Notably, the price difference between conventional ACs and their smart counterparts has been narrowed to just ₹1,000. The company anticipates selling around 500,000 smart ACs this year, a significant increase from 70,000 units last year.
These advanced smart ACs now come equipped with features such as voice command technology and defrost clean technology, which are standard in all five-star-rated models.
Thiagarajan also predicted that by 2035, India is set to emerge as the largest AC market globally, underlining the immense growth potential in the sector.
- New Models Launched: 150
- Smart AC Sales Target: 500,000 units
- Key Features: Voice command, defrost clean technology
With these strategic moves, Blue Star is not only addressing current market challenges but also positioning itself for long-term success in an evolving industry landscape.
