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Cashing in on monsoon

 Dominick Rodrigues |  2015-07-05 21:05:23.0  |  New Delhi

Cashing in on monsoon

The arrival of monsoons seem to have heralded a spirited revival of India’s flagging economy, where Mumbai witnessed several events that highlighted the country’s industry picking up vigorously to show that they are unaffected, while bringing business back into top gear and back on track with the focus on markets in the vastly untapped rural and grossly overloaded urban areas.

“HVACR is the only industry in India that has zero downsizing and this industry is expected to grow by 30 per cent  to over Rs 30,000 crore, over the next two years,” said K Ramachandran, National President, Indian Society of Heating Refrigeration & Air Conditioning Engineers (ISHRAE). 

“Cold Chain” is now seen as a “Sunrise” sector in India. During the period 2009 to 2017, the cold chain industry of India is expected to register a magnificent CAGR of around 25.8 <g data-gr-id="106">per cent</g>, which will make the value of Indian cold chain industry reach an astonishing figure of around Rs 640 billion by 2017. The participation of refrigeration and cold chain companies has been a regular feature at <g data-gr-id="107">ACREX</g> India and to further boost the industry and consolidate their participation, the organisers have created a special “Refrigeration and Cold Chain Pavilion.”

“The HVACR industry encompasses almost every aspect of building systems like cooling, heating, fire safety, automation, plumbing, lighting and others, besides  providing tremendous employment opportunities and career growth and demands for over 5,000 engineers every year,” said Ramachandran while announcing the 17th edition of <g data-gr-id="134">ACREX</g> India 2015 – South Asia’s largest exhibition on air-conditioning, ventilation, refrigeration and building services, which will be held for three days from February 25 next year. This event is rotated between Delhi, Mumbai and Bangalore annually, with the Bangalore edition this year witnessing  a mammoth turnout of over 28,000 business visitors and participation of over 400 exhibitors representing 25 countries including Canada, China, Czech Republic, France, Germany, Hong Kong, Italy, Japan, Korea, Netherlands, South Korea, Taiwan, Thailand, Turkey, Ukraine, UAE, UK and USA. 

“The government aims to develop 100 Smart Cities in the near future and the HVAC industry will play a key role in providing related solutions, especially concerning energy efficiency. The “Make in India” initiative aims at promoting India as an investment destination and establishing the country as a global hub for manufacturing design and innovation. With the construction industry witnessing a resurgence, the HVAC industry will emerge as one of the most important industry to realise the “Make in India” goal,” he said.

Pankaj Dharkar, National Chairman, <g data-gr-id="121">ACREX</g> India 2016, said the highlight of this event would also be the “Smart Homes Pavilion”. “A Smart Home” is a residence equipped with computing and information technology devices that anticipate and respond to residents needs, thus working towards enhancing their comfort, convenience, security and entertainment through upgradation of technology within the home. The home automation market in India is growing at a compound annual growth rate of 30 <g data-gr-id="122">per cent</g> with applications such as security, lighting and energy management likely to play an important role in achieving this significant growth rate. Automation and control systems <g data-gr-id="124">form</g> a very important product segment of <g data-gr-id="123">ACREX</g> India. Hence the Smart Homes Pavilion.”

Dharkar said Millennium Post that the building HVAC industry is the “most neglected one” in India and getting engineers to meet its needs is a Herculean task because the country is still in the infant stage of the cold chain. “Thankfully, air-conditioning earlier had a stunning 131 per cent  duty, slapped on its imports, which has been reduced today to 16 <g data-gr-id="140">per cent</g>,” he said while pointing out that despite there being a Rs 32,000 crore business scope for HVACR industry, there was barely four per cent penetration in India for this sector, where the growth rate is 15 <g data-gr-id="141">per cent</g>  per year. “About 60 <g data-gr-id="142">per cent</g> of electrical energy in buildings is consumed by air-conditioning and technology for this is being developed in India that is on par with the world. Smart Cities will require energy efficiency where about 40 <g data-gr-id="143">per cent</g> of power is lost in transportation today. Even waste heat recovery has to be considered for use in generating power for air-conditioning. This is where the “Intelligent Building” section of the “Smart homes Pavilion” comes into the highlight of the best of related technology. We will also hold an international seminar at this event to highlight the latest technology that will meet the needs of the peaking skyscrapers in India’s cities,” he added.

The Insurance industry, too, is wanting a piece of the country’s economic pie and is not willing to be left out, as could be witnessed from Shriram Life Insurance Co. Ltd., eyeing 25 per cent of new business growth alongside expansion into the Western and Northern regions, which have been identified by them as the most business potential regions. Manoj Jain, CEO, Shriram Life Insurance Company, said, “the company would continue to consolidate in the Southern market while planning to add around 70 to 75 new offices in Uttar Pradesh, Bihar, Odisha, <g data-gr-id="133">Jharkand</g>, Madhya Pradesh, Maharashtra, Punjab and Gujarat.

“LIC multiplied its business from 10,000 <g data-gr-id="112">crore</g> earlier to 50-60,000 crore today following nationalisation. However, private insurance represents barely five per cent of total insurance nationally and we need to take this figure to 40 per cent, as India remains still under-insured and we are running a low-cost operation.  The insurance industry needed finance and foreign capital may come to India for this purpose.”

Jain said that since its incorporation in 2005, the Hyderabad-based company now had 460 branches of, which 190 are in south India, though 40 <g data-gr-id="118">per cent</g> of its business came from North India, where it has a reasonably good branch network.  “We had sales of 1.91 lakh policies during 2014-2015, as compared to 1.38 lakhs in the previous year, and also having made profits in nine out of ten years , thus becoming the only private <g data-gr-id="131">life-insurer</g> to have achieved this distinction,” he said while attributing this to the company’s performance <g data-gr-id="132">in efficient</g> use of capital and <g data-gr-id="130">low cost</g> operations.

“The Company’s New Business Premium increased to Rs 498 crore from Rs 390 crore in the previous year and is poised to make further growth while achieving bigger milestones in the years to come. We are confident of 20 to 25 <g data-gr-id="153">per cent</g> growth in the current financial year. In gearing up for its growth phase, the company also intends to create a rural niche for itself by reaching out to <g data-gr-id="154">at-least</g> three lakh villages and is looking to double its branch base, mostly in tier III or IV towns in the next three to five years. We are also partnering with gold loan companies and micro-finance firms to reach out to the rural population, as out of the 1.9 lakh policies sold by the company last year, around 85,000 to 90,000 came from rural markets,” he said.

Jain said Millennium Post: “Our focus is on the Aam Aadmi segment, where about 58 to 59 <g data-gr-id="160">per cent</g> of our policy sales occurs. Prime Minister Narendra Modi’s comments on the Insurance Industry – describing Insurance as “critical”, is a telling commentary that is a real “door-opener” and sensitising its subject.”

Describing the life insurance market, as one having degrowth and gone flat, Jain said 2010 was the last year that this market had peaked, following which, lots of Group Insurance companies started springing up (55 per cent  in the last five years). “Selling insurance is not easy and this market is shrinking as customers are seeking a simple product. Shriram Insurance chose to create its own niche market  such as the Truck Transport sector, which witnessed, per annum, 4.5 lakhs to five lakh truck drivers taking our insurance, which is an innovative product worked out for them. Customers gold played another role in their insurance policies with us, besides us also tying up with the micro-finance sector too, where 98 per cent borrowers in this sector are women,” he said while describing its schemes as a win-win situation for both customers and the company.

Meanwhile, in the logistics side, Mahindra recently launched its new diesel mini-truck “JEETO” as the first Indian small commercial vehicle to offer a range of eight mini-trucks in five colors and choices of three deck lengths, two engine power and two payload options, at prices ranging from Rs 2.35 lakhs to Rs 2.80 lakhs.

Noting that the Jeeto will deliver <g data-gr-id="175">upto</g> 30 higher profit than its nearest competitor, Pravin Shah, President and Chief Executive (Automotive), Mahindra and Mahindra, said the company had launched this vehicle after identifying specific need gaps among the customers in the sub one tonne category through various  consumer insights and feedback. “This is India’s first modular small commercial vehicle with multiple options and will play a significant role in last mile distribution, besides being a compelling option for both stand operators, small and medium businesses, and traders through its higher earning potential and better mileage <g data-gr-id="168">upto</g> 37.6 km/l.,” he said.

“The need of the captive segment is far different from the transport load operator and, with e-commerce skyrocketing while adding to the redistribution and last mile connectivity, customers are getting more demanding. Last mile delivery has seen a quantum change over the years with companies treating this factor as a key strategic enabler. Today, consumers want large deck size mini-truck for ferrying loads and delivery through narrow lanes, heavy loads and low volume, which is not available in the market, but has been met through the JEETO.”

Shah said, “Mahindra is planning to export this vehicle to Nepal, Sri Lanka, Bangladesh and Bhutan, besides also bringing out a passenger version in the near future.”

Lubricating the way for vehicles is GP Petroleums Ltd., subsidiary of UAE’s Gulf Petrochem Group, which tied up recently with Spain’s number one petroleum company “Repsol” lubricants for exclusively manufacturing and marketing Repsol’s line of quality lubricants across India. “With the economy showing recovery, the lubricant segment is expected to witness growth in future and with the changing engine technology, Repsol lubricants <g data-gr-id="187">is</g> focused on innovation in answer to today’s consumers needs,” said Sudhir <g data-gr-id="191">Goyel</g>, Managing Director, Gulf Petrochem Group. The Group’s in-house Base Oil Storage facility of 17,000 <g data-gr-id="185"><g data-gr-id="182">kl</g>,</g> is one of the largest in the Indian Industry, which uses cutting edge remote manufacturing technology to accurately measure and control storage volumes.

The mango season may be over, but the fruit sales continue to be driven throughout India in the form of fruit drinks made by <g data-gr-id="216">Manpasand</g> Beverages Ltd. India’s overall soft drinks market witnessed aggregate sales of 20,007.2 million litres worth Rs 653.3 billion in 2014, where the main segments constituted carbonates, juices and bottled water,  together accounting for over 99 <g data-gr-id="217">per cent</g>  of the year’s total volumes. The Indian soft drinks market has been driven by innovation, particularly due to increasing preferences of consumers towards product variety and healthier beverages, popular local tastes, specific price preferences, and lifestyle habits of various classes of Indian consumers. As per Euro-monitor, lemonade/lime-based carbonates are poised to grow at a projected CAGR of 12.4 per cent by off-trade volume from 2014 to 2019, while non-cola carbonates overall are poised to grow at a projected CAGR of 9.9 per cent  by off-trade volume in this period. 

Companies are also experimenting with different pack sizes to enable pricing at levels most acceptable to the target market segment. In the off-trade channel, North India has been the largest market with total volume sales of 4,861.3 million litres in 2014, followed closely by West India (4,265.7 million litres). However, on the on-trade channel, the share of West India has been substantially higher with recorded volume sales of 3,127.0 million litres in 2014 as compared to 1,704.6 million litres in North India – making it the largest overall market for soft drinks in India. While in rural areas, consumers are generally price-sensitive and mostly prefer conventional, home-made beverages, soft drinks continued to make deeper <g data-gr-id="214">in-roads</g>, constituting about 22 <g data-gr-id="215">per cent</g> of the total off-trade sales of soft drinks in India, by volume. However, with rural consumers starting to move towards innovating products, sales of regular soft drinks such as carbonates recorded slower growth in 2014.

The Euro-monitor report states that in India, off-trade soft drinks industry is likely to reach 29,131.5 million litres (worth rs 657.7 billion) by 2019, implying a growth with CAGR of 16.2 per cent  and 14 per cent by volume and value respectively, over the five year period from 2014 to 2019. The growth is likely to be the highest in the juice segment, followed by bottled water, and sports and energy drinks. Consumers are likely to shift gradually from carbonates to juice on account of health concerns. “With a focus on the relatively under-penetrated North East India market, we launched in July 2014 the “Manpasand ORS” brand of fruit drink with energy replenishing attributes in apple and orange flavours, with approximately 10 per cent fruit content and rehydration salts,” said Dhirendra Singh, CMD, Manpasand Beverages Ltd., who quit his government job in the petroleum sector 32 years ago to set up his own juice manufacturing business in Gujarat that had recently launched its IPO at a price band of Rs 290-320 per equity share to raise Rs 400 crores. Singh said, Prime Minister Narendra Modi had urged the soft drinks industry to incorporate at-least 5 per cent fruit juice in their drinks to make them tasty, while also giving its benefits to farmers who produced the fruits. 

Describing mango drink as the major drink in India, Singh said his company’s mango fruit beverage “Mango Sip” was launched six months ago, following research that showed 10-15 per cent of  content was needed in fruit drinks, 22 per cent in fruit nectar, and pure fruit juices content being 85 per cent fruit with 15 per cent water. 

Dominick Rodrigues

Dominick Rodrigues

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