Daikin to play volume game, focuses on residential niche

Daikin India, known for its premium air conditioning products will now play in the volume zone with focus on residential air conditioners (RAC). The company is rapidly expanding in terms of products and retail outlets, and aims to be among the top three companies by 2013.

The Indian subsidiary of Daikin Industries Ltd of Japan plans to set up a sub-research and development (R&D) centre at its only manufacturing facility in Neemrana, Rajasthan. Toshio Nakano, chairman, Daikin Industries (Thailand) Ltd said, “It is very important to customise a product according to a country’s needs if one wants to play in the volume zone. That is why we are opening a sub-R&D centre to cater to specific market needs.”

Daikin presently occupies four per cent market share in room air conditioners and wants to increase it to 7.5 per cent by next year. Kanwal Jeet Jawa, MD, said, “By the next financial year, we want the percentage contribution from both segments, residential and commercial AC products to be 50:50. Our strategy would be innovation and customised products, better pricing, availability, maximum reach and ensuring timely after sales services.”

Daikin India’s turnover was estimated at Rs 800- 900 crore last financial year, growing in triple digits year-on-year. Their overall market share is 8.5 per cent in India with 50 per cent and 10 per cent share in VRVs and chiller segment, respectively. “In India, we want to have a minimum market share of 15 per cent in all the categories we operate in the next three to five years,” said Nakano.

The company has extensive plans to maximise its reach in Tier-II and III towns, too, apart from bigger cities by adding more dealers in the current retail network.

“As compared to developed nations like Japan, Unites States and Australia, the RAC penetration in India is abysmally low, up to 3 per cent. We see this as a huge opportunity by providing premium products at revised prices without diluting the quality and the premium value attached to Daikin worldwide. We are looking at expanding our retail network from the current 766 dealers to 1,200 retailers by 2012,” said Jawa.

Also, the company would increase its exclusive showrooms — Daikin Solution Plazas — from the present 48 to 200 by 2012.

Even though it would play in the volume game, the company said they would not compromise on the premium charged on products. “We did a price revision early this year, bringing down the premium cost of ACs from 40 per cent to 15 per cent. We don’t see any price dip in the near future. We will always maintain our position in the market and would charge 15-20 per cent premium for the value we offer,” he said.

Since the company’s other manufacturing facilities in Thailand, Malaysia and Bangkok are already running in full capacity, it will export products from India to neighbouring countries in the future.

Nakano said they would explore opportunities to supply air conditioners from India to neighbouring countries like Sri Lanka, Bangladesh, West Asia and Nepal once their sub-R&D is set up here.

According to the recent industry reports, Daikin has emerged as the world’s number one AC company with a global turnover of Rs 52,419 crore (¥940 billion), registering 10 per cent growth over last year.