Blue Star operationalises new plant near Andhra Pradesh; aims at 15% market share by FY 2024

Blue Star Limited, a major air conditioning and commercial refrigeration firm, on Monday announced the operationalisation of its first manufacturing unit in South India at Sri City in Andhra Pradesh, 70 km from Chennai, built on an area of 26.5 acres at a cost of Rs 350 crores.

With four ports – Chennai, Ennore, and Kattupalli in Tamil Nadu and Krishnapatnam in Andhra Pradesh –located within 100 kms, the new plant is set to reduce the cost of incoming raw materials and outbound logistics as South India accounts for 50 per cent of Blue Star’s market.

The company, which now offers air conditioners in three price segments such as premium, affordable premium and affordable, also announced that it is acquiring another 40 acres in Sri City to build a second plant that will cater to commercial air conditioners and the export market. Blue Star will invest an additional Rs 250 crores to begin with, in the proposed plant.

Addressing a news conference at the brand-new factory which began production in January 2023, B Thiagarajan, Managing Director, Blue Star Limited, said the factory will manufacture about 3 lakh AC units in the first year to gradually reach 12 lakh units annually by 2027.

“The company will manufacture some of the new products announced from this factory. The new automated and smart factory is equipped with the latest automation techniques and tools for its assembly line and material handling, amongst others,” Thiagarajan said.

With the new factory being operationalized, the company plans to increase its target to selling 8 lakh units in 2023 fiscal from 6 lakh units in 2022 fiscal and increase it to 10 lakh units in 2024 fiscal.

“Our current market share is 13.5 per cent in value, and we hope to reach 15 per cent in room air conditioners segments in FY 2024,” the MD said, adding the new factory will reduce the inventory holding period.

Work on the second phase of the new manufacturing unit has already begun with a likely investment of another Rs 200 crores. “We import compressors. With this new plant surrounded by four ports, we hope to save costs on imports and logistics. And we have excellent skilled manpower available here who have been trained for the job,” he added.