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Amber Enterprises Eyes A Slice Of PLI Scheme Pie For Air Conditioners

Amber Enterprises plans to file one application each for its motor and electronics subsidiaries under PLI scheme.

A worker assembles the outdoor unit of a Daikin Industries Ltd. split type air conditioner. Photographer: Buddhika Weerasinghe/Bloomberg
A worker assembles the outdoor unit of a Daikin Industries Ltd. split type air conditioner. Photographer: Buddhika Weerasinghe/Bloomberg

Amber Enterprises Pvt. plans to file two applications under the government’s production-linked incentive scheme that aims to boost India’s manufacturing in electronic industry.

While the maker of heating and ventilation equipment is awaiting final guidelines, it plans to file one application each for its motor and electronics subsidiaries. That would entail an investment of Rs 250 crore, Jasbir Singh, chairman of Amber Group, told BloombergQuint’s Niraj Shah in an interview. Revenue under the scheme, he said, will start flowing in only in FY23.

The government last week approved a PLI scheme that would offer incentives worth Rs 6,238 crore to makers of LED lights and air conditioners over five years. Apart from curbing imports, the scheme aims at boosting capacities in the domestic industry. Brokerages, including JM Financial, too, expect the company to be a potential beneficiary.

Growth, Import Substitution

The air-conditioner segment, Singh said, is underpenetrated in India, considering that each house can have multiple units.

Singh said the opportunity offered by import substitution is large. Many importers were unable to start manufacturing immediately when imports were curbed in October, and Amber Enterprises has already acquired eight clients, five of whom have outsourced manufacturing to them entirely from FY22, he said. The company, according to Singh, has grabbed a large pie of the 2.2-million air conditioner import market.

Long-Term Projections

Amber Enterprises, Singh said, will outgrow the industry’s 15-20% annualised growth by in the next few years. He expects the company’s return on capital employed to improve to 24-25% over the next three to four years from 18-19% at present.

Lockdown-Related Issues

With two out of the company’s 15 Indian plants in Maharashtra, Singh said a complete lockdown would affect business. The impact, he said, may not be severe as they’re located in rural areas and aren’t heavily populated.

He, however, expects manufacturing activities to be permitted with restrictions.

Watch the full interaction here: