Haier Appliances India has announced a new investment of ₹1000 crore between 2024 and 2028 for expanding its AC manufacturing capacity by inaugurated a new Injection Molding facility at its Greater Noida plant. Haier claims that the new facility will create 3,500 new jobs and will significantly contribute to the local economy in Uttar Pradesh. The upcoming AC factory has an annual production capacity of 2.5 million units and will help the company to expand the overall annual capacity from 1.5 million units to a total of 4 million units. Not just that, Haier’s new “Injection Molding facility” aims to improve production of key components, including PCBs.
In an interview with Debashis Sarkar of HT Tech, Haier Appliances India president NS Satish shared more insights around the company’s growth plans. Excerpts.
Q. Why do you think it’s the right time to expand manufacturing of ACs when there are so many brands already in the market?
There’s a huge potential in the market right now in terms of the penetration across product categories. First time buyers would look for value while the return customers would exchange for a premium product. That’s the trend we have been seeing for the past 2 years. We foresee a strong GDP growth with the government rolling out the new income tax benefit along with the younger generation triggering future growth for the future.
So, to get the most out of India’s growth story, our product needs to be the hero. Most brands are depending on either imports or on ODMs. With ODM manufacturing, the quality of the product cannot be controlled much. When brands simply buy from ODMs, the features, components, boards, coils, compressors and most things are the same from the inside. There’s very little scope to differentiate. Just the external look can be changed.
With our own manufacturing, we can ensure the product quality, provide better features and deliver a differentiated experience to the end users. For example, for the PCBs which were earlier being imported, we also have set up a plan for PCB manufacturing in the same location. The injection moulding facility for the lot of components which were earlier being outsourced have been bought in house. Apart from the product quality, there’s cost saving and the efficiency in terms of the manufacturing.
Q. What is your expectation with respect to demand for air conditioners in India that would justify new investments?
When starting a new facility, right from “groundbreaking” to the commercial production, it takes about 2 years. We have two manufacturing plants currently, one in Pune, one in Noida now, Greater Noida. So, we are preparing for our future growth. As far as the AC market is concerned, what we have seen across the globe is that the demand is steadily increasing. We cannot ignore the fact that the average temperature during summers is increasing. Another aspect is that with people buying newer homes demand for AC units with new design and features will increase. Another aspect to consider is that older AC models are no longer able to provide cooling during harsh summers simply because these models were not made to tackle summer temperatures upwards of 50 degrees. The air conditioner is a big market opportunity.
Q. The cost of owning a new AC is increasing in India. What is your point of view in this regard?
Yes, the price of AC has increased in India but what you need to understand is that older models were fixed speed units which used to increase electricity bills. So, overall, the cost of owning an AC would increase over the span of 4 years. With newer technologies, while the initial cost may seem high, the cost of running the AC is lower over the years. During summers, households run ACs for at least 8 to 10 hours everyday. Many households even run ACs for 24 hours. So, you can imagine the high electricity bills if these households are using older AC models. If you are an average user then with newer models, you can expect to recover costs in 3 years via savings in electricity bills. Another aspect is that the government is now taking energy savings very seriously with new BIS certifications and is pushing brands to offer technologies to save energy.
Q. Can you please highlight how Haier Appliance India performs in the country?
Haier is one of the unique brands which has been continuously growing for the last 6 years with a CAGR of more than 25%. We are one of the fastest growing brands. We are growing and across the product categories. Between January and February, our growth is 36%. We closed the year at USD 1 billion as a company.
Haier’s manufacturing journey in Uttar Pradesh began in 2019 with the signing of a MoU between Haier India and the Government of Uttar Pradesh. Since then, Haier has invested over ₹1,400 crore in Uttar Pradesh during 2019-2023, directly employing around 3,500 people in the state. Haier established its first manufacturing facility in India in 2007 at Ranjangaon, Pune, Maharashtra.
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