Blue Star to invest over Rs 50 crore in advertising this summer season

Blue Star Managing Director B Thiagarajan on Thursday said that the company is expected to register a 50 per cent growth in sales this year owing to a strong summer season and rising disposable incomes of Indian consumers.

"Last year we sold a little over 1 million units, and this year we expect to sell 1.5 million units, which is over 50 per cent growth," said Thiagarajan.

Thiagarajan's comments came on the sidelines of Blue Star unveiling its new range of room air conditioners (ACs), which includes inverters, fixed-speed ACs, and window ACs.

India's AC market reached 10 million units in 2024 and is expected to reach 17.5 million units by March 2026, per Thiagarajan. The company projects sales of 1.75 million units next year.

"The summer of 2024 saw unprecedented growth of 57 per cent, and while 2025 is expected to grow at a lower rate of 25-30 per cent, demand remains strong," Thiagarajan stated.

However, he cautioned that a significant shortage is inevitable if demand surges by 50-60 per cent this season. 

"A 25 per cent growth is itself a big growth over last year. I don't think overall there should be a concern if it stays around 25 per cent," he said.

The company aims to achieve a market share of 14.3 per cent by FY26 in the Room ACs segment.

Dependence on China

He acknowledged that India remains heavily dependent on China for compressor supply, with Chinese manufacturers meeting approximately 65-70 per cent of the required production capacity.

The key concern among AC manufacturers is that while the market demand is rising, the number of imported components is decreasing, leading to a possible shortage.

"India could achieve self-reliance in compressor manufacturing by 2028, but in the interim, companies must carefully plan their inventory on a quarterly basis," he said.

Price Hike From April

Thiagarajan also raised concerns about the ongoing global trade wars, which have disrupted supply chains, led to retaliatory tariffs, and caused financial market volatility.

"Essential raw materials like steel, copper, and aluminum—widely used in air conditioner manufacturing—are becoming more expensive. Additionally, trade tensions have impacted currency exchange rates, causing fluctuations in the Indian rupee, further affecting import costs," he said.

To cope with these rising costs, manufacturers revised their prices in February and may need to implement another price hike in April, as per Thiagarajan.

The price hike at Blue Star could be in the range of 4-5 per cent.

Smaller Cities As Growth Engines

The growth continues to come from smaller cities, with Tier 3, 4, and 5 markets outpacing Tier 1 and metro cities. The southern region continues to lead the company's growth, but the North is catching up. Jammu Kashmir and Haryana are now the company's biggest markets in the North.

Virat Kohli remains Blue Star's brand ambassador for room ACs, playing a pivotal role in enhancing the company's brand awareness and equity, especially in the Northern region.

Blue Star plans to invest over Rs 50 crore in advertising during the ongoing summer season.

Expanding Manufacturing Footprint
Blue Star has established a cutting-edge manufacturing facility in Sri City, Andhra Pradesh, which began commercial production in January 2023. Additionally, the company operates two dedicated plants in Himachal Pradesh for manufacturing room air conditioners. 

These facilities are equipped with advanced automation technologies, including state-of-the-art assembly lines and material handling systems, and they are also involved in comprehensive initiatives focused on IoT integration and digitalisation. 

Blue Star's production capacity is currently around 1.4 million room ACs with these plants, with plans for gradual expansion to 1.8 million units soon.