HYDERABAD: Blue Star, India's largest central air-conditioning company, anticipates its financials in the next two quarters to be affected by the downtrend in commercial construction activity.
According to B Thiagarajan, president (air-conditioning and refrigeration group) Blue Star, the company expects growth in its contracting business, which accounts for 40 per cent of the revenues, only after two years.
Contracting business involves air-conditioning of projects such as shopping malls, airports, and large office complexes.
The company suffered a net loss of Rs 11.01 crore in the half-year period in the current fiscal mainly on account of a lull in contracting business.
The company reported a net profit of Rs 75.79 crore in the corresponding period last fiscal.
According to the company, the electro mechanical projects and packaged air-conditioning business, accounting for 64 per cent of the total revenues in the second quarter, declined by 19 per cent while segment results fell sharply to a loss of Rs 3.41 crore as compared to a profit of Rs 43.37 crore during Q2 FY11.
"The cost overruns due to sudden collapse of construction activity. Some projects did not get closed. In the process we indeed incurred losses...Our forecast is contracting business will have tough time for the next couple of quarters and the growth we expect in the market will be only in 2014," Thiagarajan told media-persons at a press conference here today.
To a query, he said, the company will invest Rs 20 crore in advertisement and other promotional activities for this season and is mulling to hike product prices by 10 to 15 per cent for the ensuing summer season.
Blue Star which has a market share of 7.5 per cent in room air-conditioner market is aiming to reach 9 per cent share this year.
"We have improved our market share from 5.5 per cent to close to 7.5 per cent. We should move towards the 9 per cent range this year itself. That is our plan. We have hopes to improve our market share to even 15 per cent in the coming years," he said.
The company commands 30 per cent share in packaged air- conditioners market and 25 per cent in refrigeration and cold storage segment.
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