India's Blue Star expects 25% jump in AC revenue from summer demand boost

By Praveen Paramasivam

CHENNAI, March 4 (Reuters) - India's Blue Star BLUS.NS is targeting a 25% rise in air conditioner sales as hotter-than-usual summer is expected to drive strong demand during the season.

"The indications are ... the summer season will be good (for the AC segment)," Blue Star Managing Director B. Thiagarajan told Reuters on Monday. A brighter economy is also expected to boost AC sales, he added.

The optimism comes after Blue Star's AC sales came in below projections last summer due to a cooler-than-expected season, prompting it to call the period "a disappointing one."

Blue Star is launching new models and ramping up ad spend to better compete with rivals such as Tata Group-owned Voltas VOLT.NS and Japan's Daikin Industries 6367.T in a crowded AC market.

The company is doubling its spending on ads to 400 million rupees ($4.8 million), Thiagarajan said, as it jostles for advertising slots on popular events such as the Indian Premier League cricket tournament in the run-up to the country's general elections this year.

Although inflation is taking a toll on the consumer goods sector, especially in rural areas, AC makers are likely to face a smaller impact, since their customer base is mostly affluent.

Thiagarajan said two-thirds of sales come from small cities and towns, while first-time buyers purchase nearly 90% of all its ACs.

Blue Star also aims to close the year ending March with revenue of roughly 100 billion rupees, Thiagarajan said. It had reported 79.77 billion rupees last fiscal.

($1 = 82.8880 Indian rupees)

(Reporting by Praveen Paramasivam in Chennai; Editing by Eileen Soreng)

((Praveen.Paramasivam@thomsonreuters.com; +91 867-525-3569;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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