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issue: January 2007 APPLIANCE Magazine

New Delhi Report
Commercial Refrigeration: Big Business in India


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by Adite Chatterjee, India Correspondent

The air-conditioning and refrigeration markets in India are likely to witness spectacular growth in the near future. And much of this growth is likely to take place in the commercial rather than the household sector.

As the retail industry gets more organized, there will be a growth in demand for cold retail chains. The process of storing, transporting and displaying food at appropriate temperatures will gain more significance. Recently the city of Hyderabad in southern India saw the launch of 11 Reliance Fresh stores. Promoted by the largest corporate conglomerate in India, Reliance Industries, the 11 stores are expected to be the beginning of a foray into retailing expected to be the largest India has witnessed. The company intends to invest Rs 250,000 million (approx. U.S. $5.6 billion) to launch a national chain of supermarkets and hypermarkets selling everything from groceries to fresh vegetables to consumer durables under one roof. The national roll-out could include the opening of stores in 784 cities and 6,000 small towns by 2011.
Such hyperactivity on the retail front is good news for OEMs selling air-conditioning and refrigeration systems, such as Carrier Corporation. President Geraud Darnis is betting big-time on the cold chain refrigeration market in India. In fact, Darnis feels that the cold chains refrigeration segment could be bigger than air-conditioning.
Carrier entered the Indian market more than 20 years ago. In 1993, at a time when the market was made up mostly of small, unorganized air-conditioner manufacturers and a few Indian companies, Carrier launched successful new air-conditioner lines and became the market leader. However, over the years, it lost out to the aggressive marketing strategies of the Korean players.
Carrier is now taking a fresh look at the Indian air-conditioning market, revamping its strategy and offering consumers products more to their liking. Darnis says that the company will be introducing new technology and higher efficiency products. One product already introduced in Indian market is the Aqua Force, which Carrier claims is the “highest energy-efficient chiller in the world.”
Carrier is clearly not going to ape its Korean rivals’ value-for-money pricing strategy. Instead, the focus is on energy efficiency. The company feels that, as consumers get more demanding about the efficiency of their appliances, they will be willing to pay a little more for air-conditioning appliances. With appropriate consumer education and a cost-effective marketing campaign, Carrier could use this unique attribute of its products to regain some market share lost to its Korean competitors.
But in the air-conditioning segment too, Carrier’s focus will continue to be on the commercial segment, which is more sensitive to energy costs than residential customers.
Another company that is showing keen interest in the growth of the cold chain refrigeration segment is Blue Star Ltd. Pointing to the Indian government’s initiatives to enhance production and export of fruit and vegetables and the emergence of organized retail, the company’s Executive Director Satish Jamdar recently told APPLIANCE that this presents a huge business opportunity. The company has signed technical agreements with consultancy organizations in Europe that specialize in cold chain solutions. It is also collaborating with Danfoss, a world leader in compressors and control solutions, for addressing methods of conserving energy in HVAC/R applications. It will also initially import, and later manufacture, the Bitzer range of compressors. Bitzer is a global leader in refrigeration equipment that is widely used in supermarkets. Agreements with supermarket display cabinet OEMs in Europe are also in the cards.
Clearly, the anticipated boom in Indian retailing is ringing in a new era of growth for air-conditioning and refrigeration manufacturers.

 

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