Blue Star forays into water purification

Blue Star, the air-conditioning and commercial refrigeration major, has embarked on a strategic plan to de-risk its business by foraying into water purifiers, and through expansion in key export markets.

After 75 years in AC and commercial refrigeration business, the Mumbai-based major, which introduced a range of water purifiers in the country, is now targeting sales revenue of Rs 400-Rs 500 crore over the next three years.

“Entering into lucrative water purifier market, expanding overseas market, and indigenisation are part of the broad de-risking business strategy for us,” B. Thiagarajan, joint managing director at Blue Star told Financial Chronicle.

Foraying into the residential RO (reverse osmosis)-based water purifier market is also a part of the company's de-risking strategy from its very high revenue dependence on refrigeration and air conditioning. RO technology is a processing membrane to purify water by removing tiny microbes and chemicals dissolved in water. Other technologies include UV (ultra violet) and UF (ultra filtration), RO+UV and RO+UV+UF technologies.

Thiagarajan said the brand had forayed into the residential water purifier market with the launch of premium range of water purifiers in October 2016 to test the market as part of its strategic diversification and growth plan.

The company had launched 13 models in about 20 cities priced between Rs 15,000 and Rs 45,000 for each unit. 

He said the water purifier market in in India was pegged at about Rs 4,200 crore and growing at the rate of 15-20 per cent annually.

“We are targeting sales revenues of Rs 400 to Rs 500 crore from water purifiers by FY 2021,” Thiagarajan said. The company had clocked Rs 50 crore sales revenue in the first year of operation in FY2018 by selling over 50,000 units of water purifiers in the country.

“We will touch Rs 100 crore by the end of FY2019 by selling over 1 lakh units of water purifiers in the country,” Thiagarajan said, pointing out to the robust demand for these products across India.

While rival Eureka Forbes with its two brands such as Aqua Guard and Aqua Sure is the market leader, Kent, Hindustan Unilever’s Pureit and LivPure are the other major brands competing for their market share in Asia’s third biggest economy.

Blue Star is also deepening its roots in the overseas markets of West Asia, Saarc and North African countries. “We will enhance the overseas business from Rs 500 crore last year to Rs 1,000 crore in the three years,” Thiagarajan said.

He said the Blue Star International FZCO, the holding company based in Dubai, which was set up last year, has subsidiaries in UAE and joint ventures in Malaysia and Indonesia.

The company also has its own distribution centres in Bangladesh, Sri Lanka, Maldives and Nepal. “Bulk of the export sales revenues of Rs 500 crore came from UAE market,” Thiagarajan pointed out.

“We are targeting 10 per cent market share in the growing water purifier market in the country,” Girish Hingorani,chief marketing officer of water purifiers division at Blue Star, said.

He said the company has set up an Rs 8 crore R&D centre at Thane, near Mumbai and employed 12 microbiologists.

At present, the company offers 35 models of water purifiers in the price range of Rs 11,00 to Rs 45,000 per unit.

michaelgonsalves@mydigitalfc.com

Columnist: 
Michael Gonsalves