Blue Star to shelve Jammu project if state refuses CGST refund

Air-conditioning and commercial refrigeration major Blue Star today asserted that it will junk its plans to set up a greenfield manufacturing plant in Jammu if there is no Central GST compensation from the state after the new taxation regime is implemented.
Blue Star joint managing director B Thiagarajan also said as an alternate plan (in case the company does not put up plant in Jammu), it will set up a bigger plant in Sri City in Andhra Pradesh.
Blue Star said it is in the process of setting up two major facilities to redesign and augment its manufacturing footprint. These will be located at Samba in Jammu and Sri City in Andhra.

The company had earlier said it had plans to invest Rs 215 crore over the next three-four years towards this exercise which will increase its overall production capacity by about 1 million units towards the final phase.
"Currently Centvat, which is 14 per cent is being reimbursed. Under GST the Centvat becomes the CGST (Central GST). After the GST, the total tax becomes 28 per cent - state GST at 14 per cent plus Central GST 14 per cent.
"There has to be clarity on who will reimburse the CGST part. Jammu & Kashmir has to notify that this money will be reimbursed. If the concession is not going to be there, we can better invest it in much more bigger factory in the South (Sri City). It does not make any sense to continue in Jammu (if CGST is not reimbursed)," Thiagarajan told reporters here.

He said they will commence construction of the Jammu factory in July once the clarity on GST comes. Otherwise it will start the Sri City project. The company currently has five manufacturing plants.
Replying to a query, he said they expect revenue to be close to Rs 5,000 crore this financial year and touch Rs 7,000 crore by next.
Thiagarajan said the room AC market has grown at 20 per cent in the first nine months of the current fiscal, while Blue Star has grown over 30 per cent. Blue Star currently has 11.5 per cent market share and aims to gain 12.5 per cent in FY 18.