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Aim revenue growth of 20-25% in FY17
Vir Advani, ED and President, Blue Star
Feb 16, 2016 | Source: CNBC TV 18
• Growing at a higher rate than market growth: For the quarter the market grew about 10 % while Blue Star grew twice as fast and about 20 %. We had a good festival season and that is a second season for buying air-conditioner. It was much stronger than last year. Moving into the Q4, January has been strong and we are looking at positive quarter end as well.
• Good demand in tier –II and Tier – III cities: Tier two, tier three is even stronger than the metros. In the AC business, there is a shift to more energy efficient products. Today about 25 % of demand is coming from 5 star and inverter ACs, remaining coming from 3 star and 2 star. We are expecting that to keep growing. In Blue Star we are already at 30 % of our, sales are in high efficiency and surprisingly even in tier two and tier three markets, which we had earlier anticipated, may not be moving to high efficiency. We are seeing demand there as well.
• Focusing to increase distribution network: The Company is increasing its distribution over the last three years. So a lot of our growth is coming from newer markets as we call them which are tier two, tier three, tier four and tier five markets. So the bulk of growth is coming from the smaller markets whereas even today tier one, tier two markets will still of course account for 50-60 % of the company’s demand. Going forward as we expand our distribution further, this ratio should change. So it is quite an interesting shift in our demand as go forward.
• Currency depreciation nullifying benefit of cheap raw material prices: While we have commodity price benefit coming to us like copper, steel, aluminium. On the flipside we have the dollar moving the other way, but having said that there is a net improvement in our cost to the tune of 3-4 %. Going into the New Year, we are anticipating, as we usually do, we are expecting the dollar to continue to move in that direction. Commodity prices, some analysts are telling us, have bottomed out and therefore we are hesitant about forecasting cost further going down in the next year..Related Keyword
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