Improving Operational Energy Efficiency in Air Conditioning

Pradeep Bakshi, Managing Director & CEO, Voltas Limited, in an interaction with Industry Outlook, shares his views on improving energy efficiency in air conditioning, integrating advanced technologies in ACs, meeting evolving customer needs, and more.

The air conditioning market is likely to grow significantly owing to improving economic conditions and rising per capita income. How do you see this industry developing in India?

India’s AC market is expected to grow at a double digit CAGR. Innovative, convenient, healthy and environment-friendly products, to match the changing consumer preferences and evolving lifestyle, will fuel the demand. With global warming and extreme unpredictable weather patterns, demand for comfort and cooling products will only go up. To add to this, the Government’s push through the PLI Scheme for White Goods is designed to create a complete component ecosystem for the Air Conditioner industry in India and make India an integral part of the global supply chain. We believe, the Air Conditioner market is geared up to offer a new and futuristic product range to meet the demands of the aspiring middle-class.

The air conditioning industry is highly impacted by the decarbonization demand across the globe. Today, a change in the customer behavior can also be noted with increasing need for lower CO2 emission ACs. How is the industry working to be on par with the need for decarbonization?

The products are now manufactured keeping in mind the carbon footprint in the environment. Voltas persistently works to add value to its business and reduce carbon emission from products and services with an aim of making these more efficient and less resource intensive. The company plans to use digital tools to create value for the customers in line with the improvement of efficiency of products and services along with carbon emission reduction, and leverage digitalization in approaching customers. Decarbonizing by switching to eco-friendly refrigerants, improving operational energy efficiency has helped us cater effectively to the eco-conscious buyers today.

Since having a smart house is an emerging trend nowadays, clients want their appliances to be connected with other systems. How is the industry integrating advanced technologies in ACs while keeping in mind the cost factor?

The demand for integrated appliances increased manifolds especially post the onset of the hybrid work culture as consumers had to manage work and home chores together. According to a recent survey by Voltas, 52% of the respondents said they use the auto cook technology in the microwave oven for quick meal preparations. Moreover, dishwashers have also emerged as a popular new entrant in the consumer durables space and 67% of Indians said that dishwashers will help them ease their job and help save time in the kitchen.

Moreover, our Consumer Usage and Attitude survey revealed that 83% of consumers are looking at advanced features such as Wi-Fi enabled ACs owing to WFH, indicating rising demand for smart ACs.

Keeping in mind these evolving customer needs, Voltas introduced HomeWhiz™ technology that allows customers to control multiple functions on washing machines and dishwashers through their smartphones. We have also launched India’s first AC with HEPA filter technology to address the consumer demand for sustainable products with advanced health and hygiene features. We have also introduced our Wi Fi enabled ACs for better access. India will harness the capabilities of ‘Make in India’, helping the industry source the raw materials locally at relatively cheaper rates. This will eventually reduce the cost burden that the industry is facing due to freight, import duties and foreign exchange fluctuations, enabling it to offer its products at competitive prices.

Even though programs like BEE Star Label and manufacturer dedication to greener designs have reduced the consumption cost, energy cost expenditure is still a major concern for the air conditioning industry. How are the manufacturers approaching to solve this issue?

In its six decades of operations, Voltas has worked towards introducing various innovations to deliver products with high levels of energy efficiency. The company launched India’s first energy efficient Air Conditioner in 2007 and was the first brand which introduced the star rating concept in the industry, encouraging patrons to adopt an energy-conscious lifestyle. Voltas has also introduced the first Inverter Window AC in India and All Star Inverter AC range, along with India’s first 5-star rated Front-load Washing machine, as well as India’s first Adjustable Inverter AC range with flexible tonnage options. Voltas has also been the proud recipient of Most Energy Efficient AC award from BEE, Ministry of Power, from 2009 onwards, on multiple occasions.

The air conditioning industry is highly dependent on seasons and witnesses a season dependent busy or low period. Therefore, managing the company without financial loss can be challenging for the management. How do you tackle the fluctuating demand pattern?

Over the past few years, we have witnessed an increased interest of the Indian consumers in upgrading their products for advanced features and energy efficiency despite the anticipation of subdued buying sentiment. With the present weather conditions and the inherent need for these products, the consumer perspective has shifted and they now view cooling products as a necessity, rather than a discretionary spend. Moreover, Voltas offers All Weather ACs that provide intelligent heating and cooling, Anti-microbial air filtration features and super dry humidification modes keeping their demand high around the year. It is also interesting to note that, customers consider purchasing air conditioners during the festive season from September to November due to the onset of second summer in India and during home renovation.

Moreover, Voltas Beko, a JV between Voltas and Turkey based home appliances company Arcelik, has crossed an important milestone of 1 million units in one year and thereby becoming one of the fastest growing brands to reach this landmark. Voltas Beko has already sold 2 million units. The introduction of Home Appliances within our portfolio has helped us stay relevant as a brand throughout the year viz a viz our customers and trade partners.

How do you see the air conditioning market evolving in the near future?

The summer of Q1 FY23, has helped us gain an unprecedented growth in comparison to the last three years. Our Room AC business has grown and so has the overall cooling products and home appliances business. In future, we see the Smart Split ACs holding a large share of the room air conditioner market in terms of volume and revenue, due to increased adoption of energy efficient technologies available at affordable prices. Owing to the highly developing market, the air conditioner manufacturers will provide seamless inter-connectivity between appliances through Wi-Fi and voice-assistants. We believe that our wide presence, focus on the emerging channels, excellent distribution network, strongest brand equity and attractive consumer offers, will help the brand stay ahead of the industry.