Enters newer areas; expands retail footprint
Orient Electric, part of the CK Birla Group, is looking to strengthen its appliances business by diversifying into newer geographies, consolidating its presence in existing markets and expanding its retail footprint.
The appliances division includes products such as air coolers, water heaters and smaller appliances like mixer-grinder and iron. The segment currently contributes to around 20 per cent of the company’s total turnover which stood at around ₹1,630 crore as on March 2018.
According to Saurabh Baisakhia, Senior Vice-President and Business Head, Appliances, Orient currently holds 7-8 per cent share in the air cooler market. Plans are afoot to shore it up to 12 per cent by the end of FY20.
The air cooler market in India, which includes organised and unorganised players, is estimated to be close to 7-8 million units in volume terms and around ₹2,500-3,000 crore in terms of value. The share of organised segment stands at around 40 per cent.
“The air cooler industry has been growing at a CAGR of 10-15 per cent for the last three years. For us the growth has been close to 35 per cent and we expect to maintain this growth even as our base has been increasing,” Baisakhia told BusinessLine.
A majority of the demand for air cooler comes from north and central India. However, the company has been witnessing a steady rise in demand from other markets as well. Accordingly, it is looking to expand its presence in Andhra Pradesh, Telangana, Tamil Nadu, Odisha and Gujarat among others.
The company is also looking to expand its retail footprint to 10,000 outlets — up from the current level of 8,000 outlets.
“The focus is not just on expansion but also on strengthening our footprint in existing markets. We would ideally aim for a 20-25 per cent share in the air coolers market moving forward,” he said. The company has earmarked around ₹25-30 crore towards marketing and advertising.
Orient has come up with a new range to suit varied aesthetic preferences and usage environments and has launched a range of IoT-enabled coolers.
Air coolers contribute to 50 per cent of the revenues of appliances division, while 30 per cent comes from water heater and the remaining (20 per cent) from small appliances.
The company recently entered into a strategic partnership with Italy’s De’Longhi Group thereby bagging exclusive rights to market and sell three international premium small appliances brands in India — De’Longhi, Kenwood and Braun.