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Daikin eyes expansion in India, Africa to drive growth

15, Jun. 2020

File photo of employees at Daikin's factory in Neemrana, Rajasthan state, India. (Photo courtesy of Daikin Airconditioning India)
File photo of employees at Daikin's factory in Neemrana, Rajasthan state, India. (Photo courtesy of Daikin Airconditioning India)

By Atul Ranjan

NEW DELHI, NNA – Japanese air conditioner giant Daikin Industries Ltd. is making headway in India and Africa with the build-out of a regional sales office in Nairobi and plans for a third manufacturing plant in the South Asian country that will serve the regions, a senior company official said.

The firm hopes to expand in markets from India into East Africa by exporting from its Indian subsidiary Daikin Airconditioning India Pvt. Ltd. The planned India factory expected to cover 50 to 60 acres would boost capacity to meet any requirements for growth regardless of economic impacts from the COVID-19 crisis.

“COVID-19 hasn’t dampened our investment interest as we continue to look for land to set up our third manufacturing facility in the country to cater to local and overseas markets including Africa where we are looking to expand our presence,” Daikin’s regional general manager, air conditioning business, India & East Africa, Kanwal Jeet Jawa, told NNA in an interview Saturday.

Daikin is negotiating over factory sites with Indian states that have policies to attract foreign investment and promote local manufacturing, Jawa said. The Indian air conditioner market is largely untapped because of a relatively low penetration today, he added.

The company has spent a combined 20 billion rupees ($263 million) on an Indian research and development facility and two factories in the northern state of Rajasthan with capacity for more than 1.2 million air conditioners per year.

The Nairobi office set up initially in September is adding sales and marketing staff people as well as “specialists”, said Jawa, who’s also the managing director and CEO at Daikin Airconditioning India Pvt. Ltd.

Daikin’s Indian subsidiary had invited 50 people including sales agents from East African countries about three months ago for training.

To advance in Africa, Daikin announced in last November its partnership with Wassha Inc., a Japanese startup using Internet of Things technology to develop an electrical power service business in the non-electrified areas of Africa, to introduce high-efficiency ACs to small stores and ordinary homes in Tanzania through a subscription method in a bid to drive demand to gain traction in the country.

“Daikin aims to construct a business model that reduces user initial costs and produce revenue even in small immature markets (like Africa),” the company had said in a statement.

The 55 air conditioner brands actively sold now in Africa are mostly Chinese and South Korea, according to a mid-2018 report by CLASP, a non-governmental organization focused on appliance energy efficiency. About 2.8 million units were sold there in 2017.

Daikin’s 11-year-old Indian subsidiary told NNA its revenue has topped 50 billion rupees mark for its first time in the year ending this past March. It expects a revenue fall of 20 to 25 percent in the current fiscal year as India’s anti-coronavirus lockdown hurts consumer demand.