CHENNAI: Daikin, the Japanese air conditioning manufacturer, is likely to set up its second plant in India, either in Andhra Pradesh or Telengana and also expand its Neemrana facility in Rajasthan.
The company recently announced a Rs 330 crore investment in Neemrana to double the plant’s existing capacity.
Daikin was also scouting for land in the west and southern regions in India, but seems to have zeroed in on the two southern states. A senior company official termed the second plant as ‘vital’ for Daikin’s ambitious expansion plans in India.
Speaking to Express, Daikin India Managing Director Kanwal Jeet Jawa said that both decisions—to expand its existing facility and set up a new plant are pivotal to furthering Daikin’s goals in the country.
“We are focused on increasing our presence in the Indian market. We are looking to follow a similar strategy to what we followed in China,” said Jawa.
China, now contributing nearly Rs 30,000 crore to Daikin’s revenues, started out as a low penetration market similar to India, he pointed out.
India currently contributes around Rs 2,500 crore in revenue, but Daikin is planning to sell over 10 lakh room ACs in the next 3 years alone.
At the core of the expansion plans is the new facility.
Because while the Neemrana expansion will see the facility rolling out 1 million units per annum from late 2017, the increase in domestic demand could well absorb that increase.
The new plant will play a crucial role in Daikin’s plans to export to Africa and the Middle East from India.“We want to ship units to Africa and the Middle East. Which is one of the reasons we are looking to site the plant in the West or the South,” said Jawa.
But among the prime candidates for the new site are Andhra Pradesh and the newly created state of Telengana.
“We are seeing a lot of cooperation from the Chief Ministers. They are very bullish about bringing in new investments,” said Jawa, adding however, that a final site has not been locked in yet.
As for the quantum of investment, Jawa declined to reveal exact numbers, stating only that it would be substantial.
“We don’t do things small in Daikin and the investment will be substantial. Our initial investment in the Neermana Facility was Rs 1,100 crore,” he said.
R&D centre to operate from July
Daikin’s brand new Indian R&D facility, which will be a vital cog in its Indian and global plans, will become operational from July this year. The facility has been built at an investment of `90 crore.
Dealership expansion
Part of Daikin’s expansion strategy in India will see it increase its dealer base from 4,000 to over 7,000 touchpoints in a few years. Daikin’s exclusive showrooms, meanwhile, are set to double to 600.