Blue Star will launch product equipped with Virus Deactivation Technology in July: B Thiagarajan, MD

B Thiagarajan, Managing Director, Blue Star Ltd, talks about the impact of lockdown on his business, demand, order book, inventory situation, new product equipped with virus deactivation technology and participation in Atmanirbhar Bharat among others during an exclusive interview with Swati Khandelwal, Zee Business. Edited Excerpts: 

Q: Has there been a good pickup in demand as the onset of the summer season has ended and monsoon has arrived? How will you quantify the impact of lockdown on sales so far?

A: The good news is that at least the market has opened up at quite a few places. So, a revenue scheme has commenced. Therefore, as per the room air conditioners are concerned, almost 90% of our stores are operating at this point of time, apart from eCommerce. Still, it is difficult to summarize it as demand is low if I compare last June to this June than my rough estimate is that it is 70% of the last year June secondary sales because the consumers are not venturing out. You have rightly said that the monsoon is set in most of the parts of the country except the northern region and the sale will continue to be good there. I think in the north last year’s June to this June same kind of volumes should be there. One hopes that by the time the festival season arrives, we will be able to revive and get back on track to the last year. This is the situation on the ground. As far as water purifiers are concerned then the demand has begun and I think that it will do well because people are health conscious and that’s why that market should be good. 

Q: Private CapEx has laggard a bit now and people are not making fresh investments and are either utilizing what is available or have entered into the phase of consolidation. What is your order book at present and have you seen the cancellation of any big order? 

A: We had around Rs 2,900 crores of order book into our mechanical and package air conditioning segment. As of now, we are not witnessing order cancellation but at the same time are not seeing a big rush for execution as well. Quite a few sites have opened up and I would say around 30% of the sites are operational now. And, the issue of migrant labours will cause some shortage of labourers. We are giving priority to the sites where the cash flow is positive and where we know progress will take place as per the contract schedule. As of now, we are not seeing any cancellations and having said that I would think quite a few orders may get delayed nobody will cancel it but they may delay it. 

Q: Can you give us an idea about the inventory situation and the level at production has started and the segment that is under demand? Also, update us about the response on the air purifier, which was launched in the recent past?

A: Inventory is not in a very unhealthy situation, I would say it is more than required. It is well regulated as of now and we have gone through this crisis in 2018, therefore, we are confident that we will overcome that though it is a burden at this point of the time. There are quite a few products that are COVID related, I would say, which are doing extremely well like air purifier, which is inbuilt in air conditioners. So, we have got an air conditioner with an inbuilt air purifier and there is a demand for that. We are soon launching a product which will have COVID or generally the virus deactivation technology in the filter and that product, I think will have traction. We are having a huge number of orders for vaccine pharma & healthcare-related cold storages and the sector is doing extremely well. Food preservations and food delivery related to cold chains solutions are in great demand. We are seeing great demand for air conditioning duct cleaning services because people are becoming health conscious so that business is moving forward very well. Also, the emission-related solutions in our after-sales offerings. So, therefore there are some silver linings and we are also expanding our product portfolio to bring in this COVID protection to the extent it is possible. 

Q: You talked about a product with virus deactivation technology. Can you please elaborate it a bit more and a timeline by which the product will be launched and is this technology indigenous? 

A: This is going to be launched In July and a formal launch announcement should be happing in the middle of July. We have done the base work and the field trials are going on. This is a patented technology of the filter material, which we are incorporating in the air conditioners. So, it is nothing but the air conditioner with inbuilt air purifiers but this particular product will ensure also virus deactivation. This is what I have mentioned to the Maharashtra Chief Minister as well and the honourable Chief Minister was very excited about that Maharashtra R&D centre can launch a product. I think that it will be available in the stores by July end. 

Q: The government has a focus on ‘Vocal For Local’ or ‘Atmanirbhar Bharat’, or pushing up the ‘Make in India’ concept, which is providing great opportunities to several companies to manufacture the component that was being supplied from other nations. So, how prepared are you and how do you see that opportunity and leverage upon it?

A: We own an air conditioning company and are more than 5-6 years old and we always believed in manufacturing. I don’t think that in terms of technology we are going to face any problem at all. We also do not have any problem in terms of finished goods production but the real issue is related to components and the entire industry is dependent on imported components because India doesn’t have the market size for that. So, you have to grow the domestic market in order to become competitive in order to encourage the component manufacturers to set up a fully equipped integrated facility here. We are working with DPIT, Ministry of Commerce. The entire industry is working with them in order to ensure that India’s component manufacturing infrastructure attracts investment. If a domestic manufacturer is there then we will be more than happy to buy those components. Therefore, the government is looking at a phased manufacturing programme similar to that of mobile phones. So, over the next five years, we will be supporting this initiative, so that many manufacturers set up here for manufacturing components.

So, therefore finished goods there is absolutely no problems, component you have to give time to the industry as overnight component infrastructure will not come here. You know, we are talking about China, which has got a market size of 110 million again some seven times the market size of India. Therefore, if you want to fight with them or compete with them then you need to have the investments coming in. At the same time, you need to innovate to produce those products on a limited scale at globally competitive prices. So, my view is that in terms of finished goods, India is already ready and there is nothing to worry.

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To be a fully backward integrated manufacturer, I think it will take 3-4 years to get there because we have technological resources and Indian workforce will make it happen. So fully, we are with the government and are working in a very constructive way to get this done.