Blue Star Hopes To Outperform Peers In Room Air Conditioning Business
Blue Star is prepared for the July 1 GST rollout, says Managing Director Vir Advani.
Blue Star Ltd. expects its room air conditioning business to grow at a faster rate than the industry, supported by high demand.
The unitary business is estimated to grow by 30 percent over the summer, higher than the market growth of 20 percent to 25 percent, Managing Director Vir Advani told BloombergQuint over the phone.
While there is demand for the segment to grow even faster, implementation of the Goods and Service Tax (GST) regime will have a one-time impact on the company.
We have kept inventory levels at a bare minimum so that we are able to smoothly handle the (GST) transition.Vir Advani, MD, Blue Star
He added that July 1, the expected rollout date for the GST, is good timing for Blue Star since July and August are slow months for the company due to the onset of monsoon.
The second buying season dawns during the festive month of October. Advani aims to complete the GST transition process by September, allowing it to capitalise on the seasonal demand. “The second quarter will be challenging for everyone, including Blue Star,” he admitted.
For the packaged air conditioning systems segment, the transition to GST will be more challenging. Given that the unit serves other businesses, their timely transition will affect the segment’s revenue. “We hope to catch up to all of this by March,” Advani said.
Overall, the financial year 2017-18 is expected to be a good year for Blue Star with a “significant” growth in revenue and stable margins, unless there are substantial changes in the dollar, steel or copper, Advani said.
The air conditioner manufacturer posted a 148 percent year-on-year jump in net profit in the January-March quarter, led by growth in the room air conditioner segment.