News Details
 
Daikin Becomes a Major Player
10 September 2014

In 2012, Daikin Airconditioning India (Daikin), a 100-per-cent subsidiary of Daikin Industries, Japan, earned 70% of its India revenue from the commercial air conditioning segment and the balance from residential. In 2014, it earns 70% of its revenue from the residential segment. In 2009-10, Daikin sold 34,000 ACs; by 2013-14, this figure has grown to 400,000. Its revenues have increased from Rs.440 crore to Rs.2,200 crore. It is now the second largest AC maker after Voltas in terms of revenue, according to available data. In 2000, Daikin entered India with a joint venture with the Usha Shriram group in which Daikin had 80% stake. A lot changed after 2004, when Daikin bought out shares of the Shriram Group to make the Indian subsidiary a wholly-owned arm. The company began to enter the residential AC segment with imported units. As expected, with costly imports, it could not become a mass player. Daikin reversed its strategy from its focus on the commercial segment to becoming a major player in the residential market. “The turnaround in Daikin’s fortunes in India is in large measure an outcome of higher localisation,” says Kanwal Jeet Jawa, managing director and the architect of the turnaround plan. By 2012, Daikin stopped all imports and started manufacturing residential ACs at its Neemrana plant with about 50 per cent localisation. It now manufactures all its models at its 40-acre facility in Rajasthan. Daikin manufactures 500,000 residential ACs along with 20,000 VRV units and 1,800 chiller units annually. Local sourcing has helped it to cut 45 per cent costs, and the company can now pursue a low-price strategy. While the Daikin non-inverter AC range starts from `29,600, its inverter AC range starts from Rs.35,400. A change in the pricing strategy was the single most important factor in giving sales the big push. Increasing the distribution network and improving customer service have also helped. It now has a 1,800-strong dealer network across the country with close to 100 exclusive Daikin Solutions Plazas. Eyeing a turnover of Rs.3,000 crore this fiscal, Daikin aims to be the top HVAC player in India.

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