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BW Businessworld

Panasonic Bets Big On India

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The Japanese consumer electronics company Panasonic Corp may be struggling with heavy losses internationally, but it  continues to bet big on India. On 12 December, the company expanded its presence in India by inaugurating its sixth facility in Jhajjar, Haryana — one of its largest unit so far in the country. The 76 acres of land will be a production hub for split air conditioners, full automatic washing machines and industrial tools like welding and cutting machines.

While the facility has a capacity of producing one million air conditioners and  four lakh sets of washing machines, from January 2013 to March 2014 it will produce 800,000 air-conditioners and 320,000 washing machines.

“There was a gap between supply and demand, and we were not able to supply to India market as we wanted to,” says Manish Sharma, India Managing Director of Consumer Product Division.

For Panasonic, India is one of the high growth markets in Asia Pacific with contribution of about Rs 5,500 crore of revenue last fiscal. It is estimating a turnover of Rs 10,000 crore in fiscal 2012.

For the first five to six months, the company will produce for the Indian market. However, it will gradually start supplying to West Asia and Africa. By 2013, five per cent and by 2015, 20 per cent — of the products manufactured in the facility — will be used for exports.

The plant will see invest about $200 million (Rs 1,100 crore) coming in up to 2015 and provide direct employment to 2,000 people.

Panasonic, which holds 13 per cent of the air conditioner market, has seen a healthy growth in its air-conditioner business riding on back of its Cube ACs, a product specially designed for developing countries like India. These ACs, which were being imported from Malaysia and Thailand, will now be produced in Jhajjar. Sharma expects its market share in air conditioners to grow to 20 per cent by end of 2013.

The company will, however, continue to import some products like the inverter ACs and 17 per cent of the non-inverter ACs for the Indian market.
 
Panasonic is yet to catch up in the washing machines category. It currently controls three per cent of the market and expects to touch five per cent by the end of 2013. However, India continues to be dominated by semi automatic washing machines and the share of automatic washing machines is only 35-40 per cent. Panasonic is only producing fully automatic machines here in India and importing the rest.

“We will be importing some tools and die for the semi automatic machines and start assembling them in the manufacturing unit in Aurangabad,” says Sharma. However, the manufacturing of semi automatic is not going to shift to India anytime soon.

With the weak festival season for most of the consumer durable companies this year, Panasonic too did not meet its projected revenue targets. The company, which was expecting to do sales of about Rs 1,200 crore, did only Rs 1,000 crore of business this festive season ending on November 15.

“We were expecting a growth of 72 per cent over last year’s festive season but we ended up seeing 56 per cent growth over last year,” says Sharma. “The season was mixed for us, we saw good business from bigger cities and higher end products however distribution in smaller cities was a dampener,” he adds.