Blue Star plans to start a southern manufacturing unit with an investment of Rs.100-150 crore by December 2015. It is actively considering Bangalore, Tamil Nadu and the new Seemandhra States as its new base, including Sri City which borders Andhra Pradesh and Tamil Nadu, according to its senior executives.
B. Thiagarajan, Executive Director and President, AC & Refrigeration Products Business, Blue Star, on Wednesday, said the South generated 40 per cent sales of its room or home ACs. This product range was growing at an explosive rate across the country. Blue Star expected this category to grow at 15 per cent during this financial year. Four of its facilities are around Mumbai and one in Himachal Pradesh. “By December 2015, we need a manufacturing facility in the South as logistics from our Himachal plant alone account for about 6 per cent of the product cost. We have to cut this cost,” he told a news conference to unveil the company’s new premium range.
The planned factory in the South would make about 50 lakh pieces of room ACs and some deep freezers for ice-cream manufacturers. “Bangalore is ideally placed in reaching out to anywhere in the South. We will decide the location after the elections,” he said. In spite of their growing sales, ACs cost the same or more year after year; this is because 70 per cent of the compressors and components are imported and subject to rupee-dollar rate changes. Mr. Thiagarajan said this year copper prices had hit a low. The rupee was also widely expected to appreciate below Rs.60 a dollar by the middle of this year. If that happened, “In six months, we will be able to reduce prices,” he said.