MAGNUM Blog

Indian consumer durables market is broadly segregated into urban and rural markets and is attracting marketers from across the world. The sector comprises of a huge middle class, relatively large affluent class and a small economically disadvantaged class. Appliances and consumer electronics industry is expected to double to reach US$ 21.18 billion by 2025.Electronics hardware production in the country increased from Rs. 4.58 trillion in FY19 to Rs. 5.46 trillion in FY20. TV penetration in India stood at 69%, driven by the DTH market. The total count of DTH subscribers in the country stood at 70.58 million in the country in 2020. Electronics, domestic appliances and air conditioner market in India was approximately around Rs. 5,976 cr, Rs. 17,873 cr and Rs. 12,568 cr respectively. Smartphone shipments in India increased, making the fastest growing among the top 20 smartphone markets in the world.

According to India Cellular & Electronics Association (ICEA), India has the potential to achieve a value of US$ 100 billion in manufacturing of laptops and tablets by 2025. According to DPIIT, between April 2020 and October 2020, exports of electronic goods from India stood at US$ 5.05 billion.

In November 2020, three private equity funds—Investcorp, Norwest Venture Partners and Gaja Capital together invested ~Rs. 800 crore to acquire ~ 31% stake in Xpressbees, the e-commerce focussed end-to-end supply chain solutions provider. In November 2020, Pegatron Corp., an iPhone assembler in Taiwan, announced its plans to invest US$150 million in building a plant in India. In October 2020, the Karnataka government approved a Rs. 3,540 crore  investment by Aequs SEZ Private Limited to develop a consumer electronics and durables goods (CEDG) cluster in Hubballi—about 430 kms from Bengaluru. In October 2020, Amazon India launched new specialised fulfilment centre with a storage capacity of 1.2 million cubic feet in Bengaluru, which is specialised to store and manage customer orders from the large consumer appliances and furniture categories in their portfolio.

The Government of India has allowed 100% Foreign Direct Investment (FDI) under the automatic route in Electronics Systems Design and Manufacturing sector. FDI into single brand retail has been increased from 51% to 100%; the government is planning to hike FDI limit in multi-brand retail to 51%.On November 11, 2020, Union Cabinet approved the Production-Linked Incentive (PLI) scheme in 10 key sectors (including electronics and white goods) to boost India’s manufacturing capabilities, exports and promote the ‘Atmanirbhar Bharat’ initiative.

Road Ahead

Indian appliance and consumer electronics (ACE) market is expected to increase at 8-9% CAGR to reach Rs. 3.15 trillion in 2022. Demand growth is likely to accelerate with Work from Home concept and easy access to credit. Increasing electrification of rural areas and wide usability of online sales would also aid growth in demand.

BENEFICIARIES :    JOHNSON CONTROLS-HITACHI AIR CONDITIONING INDIA LTD, BLUE STAR LTD, VOLTAS, BAJAJ ELECTRICALS, AMBER ENTPRISE, GANDHIMATI APPLIANCE, DIXON, TTK PRESTIGE, POLYCAB, HAVELLS, IFB IND.

Air conditioning systems comprise the largest share of total HVAC system demand globally. Growing urbanization is fueling the construction of retail, hospitality and commercial properties and, in turn, expanding the market for air conditioning systems in India.

Vaccine for COVID-19 requires negative temperature of -30% & more, So companies in this sector are trying to get first advantageous move by developing refrigeration systems to transport such highly perishable life saving drugs & Vaccines.

Sudden spurt in mercury levels in the country have increased month-on-month sales for most manufacturers. The market is mainly driven by the increasing demand of air conditioners in residential and commercial areas. Most of the current market for air conditioning systems is concentrated in Tier-I and Tier-II cities where construction activity is the highest. As a result of the growing momentum towards smart cities, it is expected that the demand for air conditioning systems will continue to grow.

Air Conditioning manufactures are betting high on Institutional sales for their Products. Commercial retail, rental-business again showing some positive activities will have added advantage to this sector.

Air conditioning industry in India consists of a range of product categories such as central plant systems, VRF systems, packaged/ducted systems as well as room air conditioners. Room air conditioners account for more than 50% of the market, followed by central plant systems. The AC business is split into multiple segments: Room air-conditioners that are sold through multi-brand retailers and dedicated dealerships; Variable Refrigerant Volume (VRV) and duct ACs, which are used in commercial spaces such as offices and restaurants; and chillers for large building projects like airports and shopping malls.

Road Ahead

With lot of Infrastructure development like Smart cities, Railwagons, Airports, Ship Building, etc…The sales of this Industry would grow. We expect the growth rate of 8-10% for this industry.

BENEFICIARIES :  VOLTAS, BLUESTAR, AMBER.

Air conditioning systems comprise the largest share of total HVAC system demand globally. Growing urbanization is fueling the construction of retail, hospitality and commercial properties and, in turn, expanding the market for air conditioning systems in India.

Vaccine for COVID-19 requires negative temperature of -30% & more, So companies in this sector are trying to get first advantageous move by developing refrigeration systems to transport such highly perishable life saving drugs & Vaccines.

Sudden spurt in mercury levels in the country have increased month-on-month sales for most manufacturers. The market is mainly driven by the increasing demand of air conditioners in residential and commercial areas. Most of the current market for air conditioning systems is concentrated in Tier-I and Tier-II cities where construction activity is the highest. As a result of the growing momentum towards smart cities, it is expected that the demand for air conditioning systems will continue to grow.

Air Conditioning manufactures are betting high on Institutional sales for their Products. Commercial retail, rental-business again showing some positive activities will have added advantage to this sector.

Air conditioning industry in India consists of a range of product categories such as central plant systems, VRF systems, packaged/ducted systems as well as room air conditioners. Room air conditioners account for more than 50% of the market, followed by central plant systems. The AC business is split into multiple segments: Room air-conditioners that are sold through multi-brand retailers and dedicated dealerships; Variable Refrigerant Volume (VRV) and duct ACs, which are used in commercial spaces such as offices and restaurants; and chillers for large building projects like airports and shopping malls.

Road Ahead

With lot of Infrastructure development like Smart cities, Railwagons, Airports, Ship Building, etc…The sales of this Industry would grow. We expect the growth rate of 8-10% for this industry.

BENEFICIARIES: VOLTAS, BLUESTAR, AMBER.