Robust consumer spending will drive product business, says B Thiagarajan of Blue Star

B Thiagarajan, joint managing director, Blue Star, during an interview with Swati Khandelwal of Zee Business, said although the air conditioner industry has suffered due to poor summer sales, it can post a marginal growth of 5% by end of this fiscal. Edited excerpts:

Blue Star has announced a target of achieving $1 billion sales in the next five years. How would you achieve the target?

It is quite clear that the consumers spending will continue. There is a margin pressure, but consumer spending, specifically in Tier III, IV and V towns, is very robust. Even though the room air conditioner summer sales were very poor, I think that towards the end of this financial year there will be a marginal growth of at least 5%. Blue Star will end up with 10% growth. The margin would have been under pressure, we must see going forward how the commodities as well as the exchange rates will stabilise. Consumer spending will drive the products business, whether it is room conditioners or commercial refrigeration products. We want to move into the next orbit by building scale there. We are the leaders not only in air-conditioning but also in electro-plumbing services. We witness very clear signs of revival not only in infrastructure projects like metro, railways or airports, but quite a few buildings are getting constructed and few hotels and hospitals are coming up. The professional electronic business which has turned around in this year in terms of moving upward. It will witness growth with the capex cycle flowing into the manufacturing sector. Therefore, all the core businesses are going to witness growth. The second thing is the new business where we are investing in our international footprint and we are moving very fast with 20 countries in Middle-East, Saarc and North Africa and it is doing well.

Let us know about the offerings in the B2C segment and how will increase your hold in the segment?

It has been strong, and we will end up about 10% of the market share this year. Our goal is to reach 15% in the next 2-3 years, and we are on course to that through differentiated products. We have mastered the combination of offering the best technology and the customer experience and we have been delivering a remarkable customer experience over there.

Has custom duty hike any impact on your business?

It is not due to the customs duty, but we suffered more due to the exchange rates change. This year had everything a marketeer will have to see, and it was bad summer, followed by rupee depreciation, followed by a customs duty hike, and then the interest rate hike due to the NBFC problem. But here again, the industry could cope with because of the scale. If it is four years ago, then everyone would have collapsed, but we are able to cope up with all these turbulences. But the focus is now on how the summer will be, and it is increasingly becoming difficult to predict the weather.