Jasbir Singh, Chairman and Chief Executive Officer, Amber Enterprises, talks about the impact of the ban on AC with refrigerants on his business, how the proceeds of the QIP will be used and plans to collaborate with other brands among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts: 

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Q: The government has banned imports of AC with refrigerants with immediate effect. How do you see this and how much it will add to your top line and even the profitability? Also, the company has acquired a stake in Sidwal refrigeration, what sort of synergistic benefits do you foresee? 

A: Due to this ban, our industry will move towards a larger objective, which is an objective of self-reliant India of our honourable Prime Minister. So, the 30% ACs, which were imported earlier –in value terms Air conditioners valued around Rs 4,000 crore were imported in 2019. So, after this ban, this entire 30% will be manufactured here. Some part of it will be assembled here under Phase-I and complete manufacturing will start in phase-II. So, in a year or two, the complete 30%, which was being imported will be manufactured in India. Our company is well placed to leverage this opportunity. We have 15 plants across India in different geographies and we have started discussions with our prospective customers and we hope that we will be able to take a good share of this pie. As far as Sidwal Refrigeration is concerned, Sidwal is a mobility application company of air conditioning. Amber was earlier one of the leading players in the static application of air conditioning sector where we were providing solutions on the strategy of both components and finished goods segment. So, mobility application, which relates to train air conditioners, metro air conditioners and bus air conditioners, and we were not in the segment. There is a lot of entry barriers in the space, if you have to enter the sector then it takes around 5-6 years. So, it was a product expansion synergy for us and with this, the size of the addressable market has increased for us a lot. Because in the coming time, as per urban development ministry report metros will come in around 25-30 new cities and the existing metro lines are also expanding. It is creating a good synergy for us. 

Q: You are a contract manufacturer. Let us know us about other brands with which you are working and have you acquired a few other brands in the last one-two quarters and what is the visibility in future? Also, the company has raised around Rs 500 crore via QIP, how do you plan to utilise these funds?

A: We did a QIP of Rs 400 crore with three objectives and they were we are coming up with two plants, new Greenfield facilities of which one is near Pune and land has been bought for it and construction work will be started soon and production will be started at the facility next year by the fourth quarter. The second plant will be created in South India as new customer cluster is being created in the region. So, around Rs 275 to Rs 300 crore will be spent on the creation of these two plants. Apart from this, we have also bought the remaining 20% shares of Sidwal, which was lying with them, after the QIP so some proceeds have been invested there. The remaining proceeds will be used in debt repayment. These were the three large objectives of the QIP. 

Q: What is an update on collaboration with new brands for contract manufacturing?

A: We are talking with everyone. It will be very difficult for them as companies sign NDA first. But we are talking with every larger importer who was importing them in large volumes. At the same time, we are also talking with the existing players to increase the wallet share. Our growth strategy is very simple in which we continue to work on product expansion, customer expansion and wallet share within the customer. So, we are working on these three factors. At the same time, it seems that the export business is growing due to COVID-19. For the purpose, we have created a sales team in the US. We are getting major traction related to exports in the US and the Middle-East markets for both components and finished goods.

 

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