Hitachi arm Highly Electrical Appliances eyes exports from Gujarat unit

Firm plans to hike local procurement from 36% to 85% in near future; eyes European market

Hitachi Electrical Appliances' Indian arm Highly Electrical Appliances India, which has a manufacturing unit in Gujarat, plans to start exporting air-conditioner compressors to Sri Lanka, Saudi Arabia and Dubai. The company is targeting an export volume of about 100,000 compressors from India in 2017, after which it will explore the European market.

"We are discovering the potential for exporting to countries closer to India. The company has recently exported to Bangladesh and Malaysia and we are in talks with some players in Sri Lanka, Dubai and Saudi Arabia," said Sameer Bhargava, director and vice president at Highly Electrical.

Bhargava added that for 2017, the company was aiming to export about 100,000 air-conditioner compressors to these countries from India. "We will also be exploring export market in Europe after few years."

The company is also looking to enhance domestic procurement for its Gujarat plant from current 36 per cent to 85 per cent in near future. As per the company, increased local procurement has helped it reduce material costs by 10 per cent already. For this, the company is in talks with leading steel manufacturers like Essar, Jindal and Tata for local procurement of steel.

Bhargava said, "Currently our material procurement from within India is about 36 per cent and the company wants to increase it to 85 per cent. We are importing steel, casting and some other materials from China as these are not available in India as per our required standard. For this we are in talks with some major players like Tata, Essar and Jindal."

Moreover, according to the company, high quality materials are economical in China as the volumes are much higher than India. Chinese materials are about 15 per cent cheaper. The company believes that India has potential to reduce the costs of materials but for that compatibility is required.

"We are ready to procure if Indian manufacturers can give well-matched materials in volumes. The country is capable of it. Getting supply from India will also save our time and money," said Bhargava.

Highly Electrical had set up an air conditioner compressor manufacturing plant in 2013 with an annual production capacity of one million compressors. It has doubled its production capacity to two million units in December 2016 and expects to peg a turnover of Rs 550 turnover for the current financial year even as it targets Rs 1,000 crore turnover by the year 2019.

Highly Electrical is expected to grow by 12-14 per cent as against a 9 per cent compounded annual growth rate in India. The Indian compressor market size stands at 4.3 million units as of 2016 and Highly India enjoys a market share of 37 per cent.