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Industry players are also worried that it will hamper further growth of industry which has been reeling under severe stress for the last two years.
Currently a 2.2 table ratings is being implemented by BEE and from January 1, 2014 the table will be upgraded to 2.3. As a consequence, for example, the existing four star split AC will become a three star AC and five star split AC would become a four star and so on.
The case for Window ACs is different as the current table being implemented is 2.1 table so Window ACs will have to be scaled up by two levels. This would result into a almost double price hike compared to split ACs, thus making the window ACs unviable.
Companies such as Daikin, Godrej Appliances, Voltas, Samsung, Blue Star & Carrier Midea have indicated that price hike to the tune of 8% to ten% is inevitable in order to meet the new norms.
K J Jawa, MD of Daikin AC said, “The new norms effective from January will make ACs dearer. Whenever a product will be upgraded the material costs will rise. More copper, bigger compressor will add to the rising costs. It (hike) would be not less than seven%.”
Blue star, India's oldest AC maker also echoed Jawa and further added that window ACs would see a price jump of around 16% as tey have to be upgraded by two levels.
Some of the companies seemed concerned about a backlash of this green drive resulting into further deceleration of industry growth.
“The last two years have been one of the worst for this industry. While this energy upgrade would see more upgraded products but a sudden increase of Rs 1000 in or above in a basic split AC might hamper the growth in demand,” said Pradeep Bakshi, COO, UPGB, Voltas.
Last year the industry de grew by 6%. Muted demand growth along with currency volatility played spoilsport for the AC makers. Due to gloomy macro economic conditions consumers cut their spendings and sales hardly picked up. Godrej Appliances VP(sales & marketing) Kamal Nandi indicated that his company is keeping a close eye on the developments and will take a call according to market developments.
On the back of this, split Acs will have a firmer foothold in the market. “Currently, 70% of the market is split ACs while rest is windows and as these upgrades come into effect splits will dominate further,” added Bakshi.
Owing to the green drive, companies are lining up inverter technology based Acs which are more energy efficient. “These ACs will be the future and it will drive a major part of growth in the coming years,” said Krishan Sachdev, MD at Carrier Midea. The company has three such invert tech based Acs under Carrier brand and nine under the Midea brands.
| What is now | What it will be in January | Price Hike (To meet the norms) |
| Split AC 4 star | Split AC 3 star | 8-10% |
| Window AC 3 star | Window AC 1 star | Over 16% |
| Split AC 3 star | Split AC 2 star | 5-7% |
Source: Company estimates
AC companies are feeling the heat as this may hamper the industry growth.
This upgraed is expected to be the last one in the near future.
