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00:00I'm joined now by B. Thyagarajan, MD of Blue Star.
00:02Mr. Thyagarajan, very good morning.
00:04Thank you so much for speaking with us here at NDTV Profit.
00:07Always a pleasure to have you on.
00:09Let's listen.
00:10It's wonderful to.
00:12Good morning, Tamannaah.
00:13It is wonderful to interact with you.
00:15Lovely.
00:16Let's begin with how you're looking at the season pan out.
00:19Consumer durables, and especially home electronics,
00:23have had a bit of a subdued couple of months.
00:27Do you expect that to pick up?
00:29What are the early trends you're noticing?
00:33That's not the case in air conditioners category.
00:38You know, you're aware we had an excellent summer season,
00:43which grew more than 50% this year,
00:47an unprecedented growth.
00:49Post that, the demand continues to be good.
00:53It's not at the same level as summer,
00:55but we are seeing a continued demand.
00:59I would say the air conditioner category
01:02is witnessing huge demand across the country,
01:07including tier 3, 4, 5 markets.
01:09We look forward to an excellent festive season.
01:14Mr. Thyagarajan, I just want to understand
01:16whether or not weather conditions in this case
01:18are also one other important factor which is pushing
01:22sales for air conditioners.
01:25Is that one a big factor in?
01:28And also, if you could just give us an idea with respect
01:31to e-commerce and the kind of role
01:34that it is playing for sales, as well as quick commerce now.
01:38Suddenly, we're all talking about instant sales
01:41where appliances show up on your doorstep within minutes.
01:47How do you see all of this panning out here?
01:51Agam, good morning.
01:54The demand part of it is happening.
01:56Basically, the penetration levels are lower.
02:00It is somewhere around some 7% to 8%.
02:03And it has to move up.
02:05It will more than double within the next four years of time.
02:10And so it is driven by that.
02:12Second is the urban heat effect.
02:15Even in smaller towns, the temperatures in summer season
02:19are unbearable.
02:20In the rest of the year, it is the humidity
02:24that is causing the issue.
02:26The homes that are constructed or the apartments
02:29that are there do not have any cross ventilation.
02:34The next part is connected with the power bill itself.
02:38Thanks to the energy labeling program,
02:41over the past 15 years,
02:44the energy efficiency has been improved dramatically.
02:47So if you would have bought an air conditioner in the year,
02:50let us say 2000,
02:52today it will consume only 20% of the power
02:55that it consumed in the year 2000.
02:57So therefore, running cost is no longer an issue.
03:01Then unlike other categories,
03:03air conditioners at home are consumed more than one.
03:07It could be two or three,
03:09depending on the apartment or the customer.
03:13Now, given this, the demand continues to grow.
03:19And most importantly, thanks to the PLI scheme
03:22and other initiatives of the government,
03:24local supply chain has developed dramatically.
03:28And therefore, the prices and supplies
03:30are kept at affordable level.
03:34These are the reasons for demand growth.
03:37Coming to the channels,
03:41as is the case in most categories,
03:44many channels coexist in India.
03:48So the modern trade or the power retailers,
03:52regional power retailers and other retail stores,
03:58distribution networks,
04:00and then e-commerce and the quick commerce,
04:04all of this are going to coexist.
04:07And we are also witnessing convergence
04:10of the buying patterns here.
04:13Because the consumer is using the internet
04:18to do his preliminary research
04:20on buying a product like air conditioner.
04:23And therefore, his expectations
04:25from the channel remains the same.
04:28You know, let us say in e-commerce,
04:31the price drops due to a sale.
04:34Within seconds, the consumer is aware
04:36this is the price at which,
04:37and therefore the dealer's demand,
04:39this is the price at which I will sell.
04:42Mr. Thyagarajan, just to understand,
04:44so what is the expectations?
04:46Can you quantify that from the festive season?
04:49What is the expectations to revenues
04:51that you're going to see
04:52since you already had a fantastic summer?
04:54And that is, I would say,
04:55peak season for you for your segment.
04:58But in festive season,
04:59what is the kind of revenue increment that you're seeing?
05:04I think, you know, it started with Vonem.
05:08Vonem was not that great
05:10because of Wayanad incident.
05:12I can very well understand that.
05:14But going by what is currently happening in the market,
05:17I think easily 20% growth is possible
05:22during the season, starting today till the new year.
05:28Mr. Thyagarajan, there were issues
05:30with respect to supply chain in the first quarter.
05:33Have things eased up since then?
05:34And could there be a better improvement
05:38or rather better performance
05:39based on that in the second quarter?
05:43It has eased out.
05:45At least Blue Star lost some sale
05:48in the month of June last year.
05:50Basically, we couldn't cope with
05:52because the April growth was around 70%.
05:55May was again 70% growth.
05:58But right now, there is no constraint
06:01in terms of supplies at all.
06:02And there is no over-inventory as well
06:04because with the local supply chain,
06:06we are able to plan properly.
06:08The inventories are in components
06:12because there are still supply chain disruptions
06:15in receiving the components from various sources.
06:20Okay, just one last question, sir.
06:22And this is not on festive season,
06:24but this news came in.
06:25So I just wanted your view on it
06:28or any clarification if you'd like to give
06:30that this company, WJ Towel & Co
06:33filed an arbitration proceeding against you.
06:36You had a filing saying that these claims
06:38are unsubstantiated and no financial impact,
06:41no material financial impact.
06:42Can you give us some information on this?
06:45What is the size of the arbitration proceedings
06:48that they're demanding?
06:51So this is a shareholder agreement
06:53we had entered into for electro-mechanical
06:57projects business in Oman.
07:00It was way back in 2015.
07:02And in July, 2023, there was an arbitration proceeding
07:07that was initiated.
07:09The original claim was something like rupees 2024 crores.
07:15And yesterday we received a claim amount
07:17of rupees 462 crores as against what was 224 crores.
07:24Either 2024 crores or 462 crores, all are frivolous.
07:28And these are not defendable by the party
07:34and we are defending ourselves.
07:37And there is not any financial impact
07:43that will be on Blue Star at all.
07:46We are more than confident in this matter.
07:49Okay, Mr. Thyagarajan, we'll leave it at that.
07:51Thank you so much for joining us
07:52and taking us through how things are panning out
07:56for the quarter and what we can expect
07:58going forward into the festive season.