Daikin Industries has invested INR 1,400 crore in its Indian subsidiary to enhance local manufacturing of air conditioners and components. This significant capital infusion, the largest to date, comes as part of their ongoing business expansion, particularly for phase two of their Sri City plant in Andhra Pradesh. The funds will be allocated for construction, research and development, skill development, and brand building, aiming to increase the localisation of their products from 75% to nearly 90%. Daikin competes in the INR 30,000 crore Indian air conditioner market alongside Tata-owned Voltas, LG Electronics, and Havells-owned Lloyd.
Daikin Industries, Japan's largest air-conditioner manufacturer, has invested INR 1,400 crore into its Indian subsidiary, marking the largest capital infusion in its history. This investment aims to enhance local manufacturing of finished products and components. According to the latest regulatory filings from Daikin Airconditioning India with the Registrar of Companies (RoC), the capital was infused in two tranches: INR 600 crore in June and INR 800 crore in August. Following the second tranche, Daikin Airconditioning India's paid-up share capital rose to INR 1,582.9 crore. The company has potential for further capital infusion, as it increased its authorised share capital to INR 3,000 crore from INR 1,500 crore earlier this year, as shown in the RoC filings.
In the filings, Daikin stated that the authorised share capital was increased because it requires funds for the "ongoing business expansion," specifically for phase two of its Sri City plant in Andhra Pradesh, as well as to reduce interest costs. The company did not provide additional details. K.J. Jawa, chairman and managing director of Daikin Airconditioning India, mentioned that the funds would be utilised to expand manufacturing capacity and boost component production, including compressors. Daikin anticipates that this will raise the localisation of its air conditioners from the current 75% to nearly 90%.
K.J. Jawa, who is also a board member of the parent company in Japan, stated that the fresh infusion of funds aimed at supporting their manufacturing expansion, noting that they were the largest participant in the production-linked incentive (PLI) scheme for air conditioners in India. He mentioned that the INR 1,400 crore would essentially be utilised for construction, research and development infrastructure, skill development, brand building, and internal operations, allowing them to fully capitalise on their largest manufacturing facility, which includes a compressor and device factory spread over more than 75 acres at Sri City. Daikin India competes with Tata-owned Voltas, LG Electronics, and Havells-owned Lloyd in the INR 30,000 crore Indian air conditioner market.
Daikin Industries' substantial investment in its Indian operations underscores its commitment to strengthening local manufacturing capabilities and enhancing product localisation. By expanding its facilities and production capacity, Daikin aims to capitalise on India's growing air conditioner market while leveraging the production-linked incentive scheme. This strategic move not only positions the company to better compete with established players like Voltas, LG Electronics, and Lloyd but also contributes to the broader goals of skill development and technological advancement in the region. As Daikin continues to grow, its efforts will likely have a positive impact on the local economy and industry.
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