Current Scenario of Central AC Market

Current Scenario

The Central AC (CAC) market has had a rough patch in the last two to three  years. Being dependent on user industries, it is highly susceptible to industrial growth cycles. With new industrial activity coming to a grinding halt, demand for turnkey central AC projects have dried up in last two years. Central AC segment is controlled by big players like Blue Star that have the facilities, technology and personnel required to execute turnkey projects.

One major issue facing the air-conditioner industry is that of adherence to environmental standards. As per the 1990 Montreal Protocol, ACs should not contain ozone-depleting material with effect from 2003 Central AC. Blue Star and Voltas, who between themselves have a 63% market share, dominate the industry. Carrier Aircon, which entered this segment in 1994, has a relatively modest 12% market share. Carrier plans to increase its presence in this segment in line with its global operations where it is the leader with a 40% world market share. Besides equipment manufacturers, there are also players like the transnational Emirates Trading Agency (ETA), which sources equipment from leading manufacturers, undertaking only the installation work.

This industry has traditionally been a high margin area, but of late, margins have come under pressure due to increased competition. With few orders, manufacturers are undercutting each other to grab installation contracts.The traditional compressor-chiller based market faces threat from vapor absorption machines (VAMs). These are finding favour the world over as a cost-effective and environment friendly alternative. Although the initial outlay is higher, low operating costs more than make up for it. Thermax is the dominant player in the domestic VAM market with a 90% market share. Given the environment friendliness and cost savings, VAMs could displace chillers altogether in the long run. For the existing players in the CAC segment, it may not pose much of a problem as all the major players like Carrier, Voltas & Blue Star have access to this technology from their parent/ part Service and maintenance contract income is in fact emerging as a substantial source of income for the leading players in the country. This is especially true of players who have a large installed base of machines. This revenue stream can be a buffer against a downtrend in AC sales. Some companies have started subcontracting service function to widen reach.

Utility Aspects Of CACs

1 To create a cool ambience

2 For the smooth operation of the equipment/machinery

3.To preserve and store certain raw material/semi-furnished/finished goods

4.To perform various operations like testing and other manufacturing functions under controlled temperatures

Central AC Market Shares