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'Our focus is on corporateand commercial customers'
Neeraj Seth is the executive vice president of Blue Star Ltd, and is currently responsible for the Refrigeration & Airconditioning products division of the company. Having a vast knowledge of cold chains in India and abroad, Neerajis actively involved in CII, Refrigeration & Airconditioning Manufacturers Association (RAMA) and other trade associations. In an interview with Sangeeta M.I., Neeraj Seth discusses the outlook for the air-conditioner & refrigeration industry this summer, Blue Star's plans for the residential segment, the company's promotional plan, launch of new products, etc.

What is the outlook for airconditioners and refrigeration industry this summer?
The Union Budget 2003-2004 is a growth oriented one. Excise duty on airconditioners has come down from 32% to 24%. Though the abatement has been reduced by 5%, the prices of airconditioners have come down by approximately Rs. 750 for a standard 1.5T capacity. The residential market has opened up in a big way,and we will witness good market growth this summer.

As far as Blue Star is concerned, we focus on corporate and commercial customers. Quite a few segments such as retailing, entertainment, healthcare and IT enabled services are growing. The market for processed foods, including icecreams, is also growing. On the whole, the outlook is good and barring the repercussions of the prolonged Gulf war, we look forward to a good season.

This has been a good year for Blue Star. Your net profit for the nine months period ended 31st December 2002, has grown by 42% on a sales growth of just 13%. What would you attribute this to?
We have maintained our leadership in central airconditioning, packaged airconditioning and commercial refrigeration segments by offering cooling solutions which are energy efficient and customized to the specific need of the customers. In fact, our value proposition, as you may have seen in our advertising campaign is "Cooling solutions to help your business do better".

Therefore, we enjoy customer preference, and hence leadership. Further, through value engineering, higher productivity, efficient working capital management and other cost reduction measures, we have improved our profitability.

Increasing the efficiency of an organization can grow profitability only upto a certain point. Your sales growth seems to be rather slow. How do you propose to address this?
Any growth will have to be profitable, and we will focus on profitable growth. As I mentioned earlier, several customer segments are opening up. There are new segments such as multiplexes which offer growth opportunities. Several infrastructure projects have been announced by the Union Government. The finance bill envisages huge investments in infrastructure projects, such as airports and seaports. Several concessions have been announced for tourism, healthcare industries as well as textiles. All these segments are consumers of airconditioning and refrigeration system.

Blue Star Cassette AC Blue Star will enhance its presence in light commercial segment, and also develop contract manufacturing business. We are leaders in the field of cold chain, and the market for cold chains is expected to grow. We will participate in these growth areas.

Blue Star is the most profitable player in the airconditioning industry. However, you have a very small presence in the residential segment where your brand languishes way behind of the leaders.

What are your plans for the residential segment?
It is not that we do not want to sell to residential segment. In fact, we have a contemporary range of window and split airconditioners which offer substantial power savings, aesthetically appealing, and with electronic remote control. However, we are not distributing our products through appliances showroom. The products are sold through exclusive sales and service dealers. Further, in order to succeed in the residential segment, you will have to invest huge sums in mass media advertising.

We will remain focused on corporate and commercial customers. We will also cater to small businessmen and self employed professionals through exclusive sales and service dealers. We will also promote our window and split ACs to the employees of the corporate establishments through specific programmes.Blue Star's Eco-friendly Water Coolers.

In a competitive market scenario companies would need to come out with new and improved products year after year. What are the new products that you are launching this year?
We have recently launched cassette type split airconditioners. We have also launched Tandem Scrolls packaged airconditioners which offer huge power savings under partial load conditions. A new range of deep freezers are being launched.

Our Packaged Airconditioning Division has launched an innovative remote airconditioning facility management system which helps the facility manager to precisely set the temperature, programme the system for an entire year, through his desktop/laptop thus eliminating the requirement of an operator on a day to day business.

What is your promotional plan for the coming season?
As I mentioned earlier, our value proposition is "Cooling Solutions to help your business do better". We will be targeting a male audience of age 25 years plus in the category of Officers, Executives, Businessmen and Professionals (OEBP).

We will be advertising over television as well as print media. We have published several customer advisory booklets such as "Blue Star Guide to Comfort Airconditioning" and "Blue Star Guide to Power Savings in Airconditioning".

Since we enjoy a lot of reputation with several corporate customers, we will be undertaking promotions to the employees of these corporates. These employees are aware of Blue Star expertise and capability. Having experienced our service in their workplace, they consider us as the preferred brand, when it comes to buying airconditioners for their homes.

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