Blue Star Managing Director B Thiagarajan on Tuesday confirmed that air conditioner rates are set to rise sharply this quarter and the price hike is now unavoidable. Driven by surging commodity costs, a change in energy-efficiency labelling and elevated exchange rates, the company expects AC prices to climb 10–15%.
Thiagarajan told NDTV Profit that manufacturers simply do not have the margin cushion to absorb these costs. "The industry operates with 8–10% EBIT margins," he said, adding that the recent spike in copper prices and other key inputs has put immediate pressure on production costs. "There is no room for manufacturers to absorb this at all, so it will have to be passed on to consumers," he quipped.
Thiagarajan explained that the mandatory energy label upgrade alone pushes prices up by 5–10%, depending on the star rating. While companies typically engage in 'value engineering' to soften the impact, this year's commodity and currency challenges have compounded the burden.
Despite the cost-side pressures, demand indicators are turning favourable. Dealers have begun stocking aggressively ahead of the summer season to beat incoming price hikes. "Primary sales are gaining momentum because dealers know prices will significantly go up in the coming weeks," Thiagarajan said. Secondary sales, however, are expected to pick up only after another 10 days as temperatures rise.
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Thiagarajan noted that night temperatures are already a couple of degrees higher than last year, which is an early signal that the peak season could be strong. "I wish summer sets in as early as possible," he chortled, observing that early warmth typically accelerates consumer purchases.
On the commercial cooling front, Blue Star continues to see good traction. The company remains a market leader in MEP contracting for large projects, particularly data centres which is a segment witnessing a wave of investment and new capacity announcements across India. "Every month we secure a major order," Thiagarajan said.
On the outlook for the segment, Thiagarajan described it as "extremely positive" with several customers finalising long-term strategic tie-ups.
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