20
Daikin in India
Daikin Industries, Ltd. entered the Indian market by partnering with Siel Ltd. to establish a joint venture company, Daikin Shriram Air-conditioning Pvt. Ltd. (DSAL), in the year 2000. Initially,
it had an 80 per cent stake in the joint venture.
It acquired the remaining 20 per cent held by Siel Ltd. in the year 2004.Therefore, the business is now a wholly owned subsidiary of Daikin Industries, Ltd. and is known as Daikin Air- conditioning India Private Limited.
Currently, India is a sales base for the parent company. It imports products from its facilities
Company Background
Daikin Industries, Ltd. is a diversified multi-product multinational company. Daikin provides a range of products and technologies in the area of air-conditioning, chemicals, transportation and refrigeration systems, oil hydraulics, defence systems, and electronics.The air-conditioning business of the company is the biggest among all its businesses.
The company reported net sales of US$ 7,017 million in FY06. It employed over 19,000
employees, and had 118 subsidiaries and affiliated companies worldwide at the end of FY05.
DAIKIN INDUSTRIES
LTD.
21 imports complete equipment from Thailand and
Japan and assembles them in India. Imports from Thailand constitute about 60 per cent of Daikin India’s overall imports.The Indo-Thai Free Trade Agreement (FTA) has helped the company in gaining from reductions in import duty.
Strong technological base
Daikin has a strong global portfolio of air- conditioning systems based on the latest
technologies.This has helped Daikin air-conditioning India Pvt. Ltd. in introducing technologically
advanced products to the Indian market. Daikin was the first company to introduce the Variable Refrigerant Volume (VRV) Air conditioning system in the world. It is highly active in the space of research and development of energy-efficient technologies and refrigerants that are ozone- friendly.This ensures technologically advanced products for the Indian market in the near future.
The parent company is also the world’s only manufacturer of air-conditioners, which develops all necessary system components from refrigerants to compressors.
Collaboration with an Indian company Daikin entered India through a partnership with the Siddharth Shriram Group.With the joint venture, Daikin took over manufacturing facilities and other assets of Siddharth Shriram group’s air-conditioning and water cooler business as a part in Thailand and Japan. Daikin Airconditioning India
Private Limited (DAIPL) has a distribution network comprising 11 sales and service offices, 3 spare parts centres, and around 200 dealers across India.
The sales and service offices as well as spare parts centres are well-equipped with trained manpower, and stocks of spare parts, tools and other
equipment. All its dealers are fully equipped to support and implement all activities related to sales, service and installation.
DAIPL reported a turnover of US$ 33.5 million during the fiscal year 2004-05.
The company is focused on the premium air conditioning segment in which it has a market share of more than 50 per cent. However, its market share in split air conditioners segment is less than 10 per cent.The company has had a growth rate of more than 400 per cent over the past five years. Sales to commercial establishments constitute about 70 per cent of DAIPL’s sales while sales to the household market segment constitute the remaining 30 per cent. Some of the prominent customers of the company in India are Infosys Technologies,Wipro, Oberoi Hotels, Japanese Embassy and Canadian Consulate.
Factors for Success
Indo-Thai trade relationsDaikin Airconditioning India Pvt. Ltd. currently
Increase market share
Daikin India plans to increase its market share in India by taking advantage of the current boom in the real estate, hotel, information technology and BPO industries.The air-conditioning market in South India has been growing at an average rate of 30 per cent.The company plans to achieve its goal by continuously introducing technologically advanced products, and expanding its dealer network.
22
of the deal. In addition, the venture took over the sales and marketing departments of Usha International’s air-conditioning division.This gave Daikin the necessary platform to enter the Indian market with ease.
Future Plans
Daikin Air-conditioning India Pvt. Ltd. is targeting a turnover of US$ 230 million by 2010.
The company plans to set up an assembly or manufacturing facility in India once the sales volume crosses 100,000 units a year. It had a sales volume of around 20,000 units in the year 2004.
Provide training to dealers
Daikin Air-conditioning India is investing in training all its dealers.The company has more than 200 dealers in India. It provides them intensive technical training for quality improvement through field installation and after-sales services to them.
