Air-conditioning products and solutions provider Blue Star Ltd, which had been planning to set up two greenfield manufacturing plants in Jammu and Andhra Pradesh with an outlay of Rs 300 crore (Rs 150 crore each), is likely to reconsider the move to set up the Jammu unit.

This decision comes in the backdrop of the proposed changes the new Goods and Services Tax (GST) regime is likely to bring about, and also the possibility of missing out on the concessions that the state would have potentially offered for a new manufacturing unit, according to B. Thiagarajan, Joint Managing Director of Blue Star Ltd.

Speaking after announcing the launch of a new range of energy efficient air-conditioners, the Blue Star JMD said, “Though we have acquired land in both these locations and have begun work on the Jammu project, the likely changes following the GST regime roll-out in July this year, we believe that Jammu may not work out. Some of the state concessions may be off. So it would make sense to set up one bigger manufacturing pant in Sri City in Andhra Pradesh.”

The Sri City site is located ideally and would not only serve the South Indian market, where we do not have any manufacturing facility, but also meet some of the export markets through ports located nearby.

Showcasing some of the recent products that the company has introduced taking the total number to 135, Thiagarajan said the AC business has grown by about 35 per cent so far this year as against the industry growth of over 20 per cent.

The company, which closed last fiscal with revenues of Rs 3,500 crore, is aiming to double its turnover to about Rs 7,000 crore by 2019. The company growth also factors in significant contribution from exports.

Blue Star believes that the country's AC market, which accounts for sales of about 5 million units per annum, is likely to cross 10 million units by 2020.

Predicting strong growth for AC sales during the year, Thiagarajan said there was no major impact due to demonetisation on AC sales.

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