US-based water heater manufacturer A O Smith is getting into its second phase of expansion in India by increasing its production capacity of its Bangalore facility. The company will invest over Rs 100 crore in 2013 to triple the production capacity.
Having entered the Indian market in 2008, A O Smith had set up its production unit in 2010. The 76,000 sq ft facility produces four lakh units of residential water heaters per year. It had invested $10 million on the facility in 2010.
“In the second phase, 1.5 lakh sq ft space will be added to the existing facility for an investment of $20 million. With this, the capacity of the unit will expand to 12 lakh units per year by June. The facility will manufacture 15 and 25 litre horizontal water heaters, 35 to 100 litre heat pump water heaters and natural gas products,” said Tamal Chaudhuri, managing director, A O Smith India Water Heating.
The company has been producing 36 SKUs of its residential water heaters till now. With the capacity expansion, all the 62 SKUs will be domestically manufactured. However, A O Smith will continue to import the commercial water heaters from its production units in the US, Europe and China.
The company had clocked $20 million sales from its Indian operations last year. This year it expects to grow by 40 per cent. The company also expects to break even this year.
“In the Rs 800 crore electric water heater market in India, A O Smith has 14 per cent share. In two years we want to garner 18 per cent market share,” he said.
The organised segment, which accounts for 72 per cent of the total water heater market in India, is dominated by Racold in value terms and Bajaj in volume terms. Last year the water heater market grew by 10 per cent, but the growth has slowed down to 7 to 8 per cent this year with less number of residential projects coming up during the year.
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