The company hinted at a price hike and said it will review the situation for a possible price hike in April due to rising copper, aluminum and steel prices.

Air-conditioning major Blue Star said on Tuesday it has secured semiconductor requirements for the next three years. Previously, Blue Star purchased semiconductors six months in advance. For the first time, the AC maker has tied the semiconductor requirement to 2025.

B Thiagarajan, MD, Blue Star, told FE that the company has blocked the required amount of semiconductors for the next three years. “We have never done this in our history. We used to buy six months in advance and now we have blocked the amount of vertical suppliers,” he said.

The company hinted at a price hike and said it will review the situation for a possible price hike in April due to rising copper, aluminum and steel prices. “At the moment we have decided not to raise prices. In mid-April, we will do a review to see if we need to make a price hike. We have the material in stock until June’, says Thiagarajan.

The company had increased prices in the months of April, July and October of 2021.

Thiagarajan said he expects to commission the first phase of his proposed world-class production plant in Sri City in Andhra Pradesh by December 2022, which will have a capacity of 4 lakh units of room ACs.

The company had set aside Rs 550 crore for the Sri City three-phase project and approximately Rs 220 crore would have been spent by the end of the first phase, completing the civil construction works for the entire project. Blue Star’s newly formed wholly owned subsidiary, Blue Star Climatech, will run the factory in Sri City.

Thiagarajan said that when the company completes the total three phases, the total capacity would reach 1.2 million units. “Each phase consists of 0.4 million units and will increase our capabilities,” he said.

Compared to the summer of 2019, the residential air conditioning industry is projected to grow 20% this summer due to pent-up demand and projected heat wave conditions across the country. “During two summer seasons, people did not buy ACs because of Covid-19 and temperatures are rising. The company would grow faster than the industry this summer. I think we will grow by 25%,” he said.

The company has a 13.25% market share in the residential air conditioners segment and targets 14% by 2022.

“We continue to diligently curate our product and price mix to cater to the entire spectrum of the residential AC market. With our constant focus on R&D and manufacturing, we are confident we can roll out products that offer tremendous value for money We had already expanded our indigenous production in Himachal Pradesh and are further scaling up our production operations by establishing a new world-class factory in Sri City, supported by the Government of India’s PLI scheme,” said Thiagarajan.


This post AC maker Blue Star secures semiconductors for the next three years was original published at “https://www.financialexpress.com/industry/ac-maker-blue-star-secures-semiconductors-for-next-three-years/2462024/”

LEAVE A REPLY

Please enter your comment!
Please enter your name here