Daikin to expand mfg capacity of compressors at Sri City in AP

New Delhi: Air conditioner maker Daikin expects to manufacture two million units in India this fiscal and has plans to scout for more export opportunities by making India a manufacturing hub.

The company has already sold 7 lakh units of residential air conditioner (RAC) in the first three months of the year, helped by a blistering summer this season and expects over 50 per cent growth, said Daikin Airconditioning India Chairman and Managing Director Kanwaljeet Jawa.

Daikin, which has started its third manufacturing unit in India at Sri City in Andhra Pradesh, is investing in compressor manufacturing here and aiming to manufacture five million units by 2030.

"The mandate is of 5 million units, which includes 4 million units for the domestic market and 1 million of exports by 2030 and we are very confident," Jawa said. The company is anticipating a "robust growth" in RAC volumes in the Indian market, which has a comparatively low penetration of around 7 per cent.

"The India RAC market has already passed the inflexion point and is now come to the explosion stage. At the same time, prices have also come down and energy efficiency is also going up," he said. Besides, Daikin is also exporting to markets such as South Africa, the Middle East and South America helped by its new 75-acre Sri City manufacturing unit, which is the largest factory in South East Asia.

Daikin, which entered into the Indian market in 2004, has invested over Rs 2,000 crore so far. For the financial year ended on March 31, 2024, Daikin India's turnover was Rs 10,500 crore. Daikin India, a part of Osaka, Japan-based world's largest air conditioner manufacturer, also has plans to foray into the commercial refrigeration segment. Besides RAC, the company is also expanding VRV Chiller for its HVAC business here, helped by local R&D and innovations. "Now we sell more chillers than the next big three competitors put together producing in the country," Jawa said.

Daikin had started domestic manufacturing of chillers in 2010. "We were selling just 3,000 units in 2010 and last year, we sold more than the entire Asia and Oceania put together," Jawa said, adding that "we have now more than 60 per cent market share in the (chillers) segment. In RAC we had just 30,000 units in 2010 and this year, we are talking about 2 million room units".

It's a great story for Daikin, which held 6-7th spot in 2010, when the Indian market was dominated by Korean players. "The RAC market was flooded by Chinese products in India. But Daikin decided in a big way. We put up our own manufacturing and R&D," he said, adding that besides it also puts its own air conditioning development centre and skill centres. It has now become the second largest player in the fast growing RAC segment. Currently, Daikin India's more than 60 per cent comes from the RAC segment and the remaining from commercial air conditioning.

However, going forward, it expects contributions from RAC to increase up to 80 per cent in the coming years as the penetration of category increases.