Vikas Gupta, Managing Director (Operations), PG Electroplast

5 Apr 2022 , 10:21 PM

In an interaction with Mamta Maity, indiainfoline.com, Mr Vikas Gupta, Managing Director (Operations), PG Electroplast Limited said “The company has developed two new platforms of air coolers being offered as ODM solutions to customers.”

What is your outlook on the domestic plastic products & consumer durables sector? What are the emerging trends you are witnessing in the sector?

We are quite positive on the outlook of consumer durables and electronics in India. The penetration for Room ACs is around 5%, Washing Machines is just 13% and Refrigerators is about 33%. As the access to and reliability of utilities like electricity and tap water increases in Tier 3 cities and rural areas, we see new markets opening up for ACs and WMs. The distribution and service networks for consumer durables is also improving. They are also becoming increasingly affordable due to rising incomes and lower product operating costs, and we expect even faster adoption due to the growth of e-commerce platforms and rising access to easy financing options. 

Domestic demand for ACs is growing at around 15% annually. A tropical climate, large population, and rising aspirations of millions of households are all factors driving demand for ACs in India. Therefore, in anticipation of the expected rise in demand, the country remains a crucial growth market for the consumer durable manufacturers. Rapid urbanization and a growing population have created a demand for sustainable, clean, and energy-efficient cooling solutions in India.

The Government of India’s focus to “Make In India” and for an “Atmanirbhar Bharat” are clear and it is supporting the industry through various measures like the PLI schemes, reversing the inverted duty structure created by previous administrations, over that tariff & non-tariff barriers to imports are helping level the playing field for indigenous manufacturers and will help players like us to become globally competitive.

We foresee that the demand for Washing Machines will only accelerate due to a combination of factors. There is ever-increasing female labour-force participation, which has led to decreases in time spent doing laundry. Middle-class populations are growing, with nuclear families also becoming more common which is expected to further increase market penetration of washing machines. Media participation is also increasing. The Fully Automatic options are also becoming more affordable, which should also help grow the market size in value terms as it provides the Semi-Automatic machine users an additional impetus to upgrade.

Governments all over the world over are urging consumers to use products that are energy efficient. Easy tools for comparing power consumption like the BEE star ratings and on E-Commerce platforms are also leading to consumers opting for more energy-efficient technologies. The growing scarcity of water across the globe is compelling manufacturers to make products with technologies that restrict the use of water.

The short term outlook is that the increased localization will boost domestic manufacturing and reduce import dependency. India will become an attractive destination for global giants which will help bridge the disability gap India has with its competitors. In the medium term, we see increasing domestic value addition, higher penetration across product categories, and India becoming an export hub and making for the world.

How are you gearing up to meet PLI criteria?

PG Electroplast’s wholly owned subsidiary, PG Technoplast has already received approval under the PLI Scheme for White Goods. It has committed capital expenditures of INR 321 Crores to manufacture plastic moulded components, sheet metal components, heat exchangers, crossflow fans and PCB assemblies. We are currently concluding the first phase of the capital expenditure under the scheme, and hope to be able to contribute to growing the components ecosystem in the nation. We are investing in our design and R&D capabilities to ensure that the progress we make is sustainable and such that we can compete with global players going forwards. We believe PG will be a meaningful player in the industry going forwards and are confident that we can help fulfil the goals defined in the scheme.

What are your capex plans for FY23 for capacity expansion and new product development?

We are planning a major expansion in our Washing Machine Business. We are increasing capacity 100% from 50k units to 100k units per month. We expect to cement our place as a strong number two in the outsourcing market for the same. We are also investing in three new ODM platforms which will allow us to offer 24 new SKUs.

FY23 will see us further backwards integrating in AC Manufacturing. We will start manufacturing PCB Controller Assemblies this year for ACs, which will allow us to now manufacture around 50-55% of the RAC Bill of Material (BOM) in-house. We are also increasing our production capacities for the Indoor Unit blowers, or Crossflow Fans (CFFs), substantially as our products are seeing good acceptance in the market. PG is also investing in significantly bolstering its AC R&D facilities and we are also increasing our team.

To support our future business plans, we are also increasing our plastic injection moulding and sheet metalwork capacities.

Can you shed some light on key growth triggers for the company?

The Company expects significant traction in its focus area of Products – Both ODM & OEM space for air coolers, washing machines and room air conditioners. Expectations are also rife in the plastic moulding in the consumer durables space in washing machines, room air conditioners, refrigerators, ceiling fans and sanitaryware products.

The management is optimistic about the AC business and is investing to create capacities and capabilities for the same. It’s wholly owned subsidiary, PG Technoplast has had two manufacturing facilities come online this year which tripled the group’s AC manufacturing capacities. PG is also venturing into the ODM space for Room ACs, and has invested in two platforms of AC Indoor Units and two platforms of AC Outdoor Units which have enabled us to offer more than 50 models spanning the complete range of Room ACs from 0.8-ton models to 2.0-ton models, of various star ratings, both inverter and fixed speed models.

In washing machines, the company is targeting growth in both semi-automatic and fully automatic washing machines. The company had also created substantial capacities for producing washing machines in the Roorkee plant last year and is augmenting the same further this year to support the increased demand for FY23. We are also investing in three new platforms for Semi-Automatic Washing Machines, which will allow us to offer products with wash capacities ranging from 6kg, all the way to 14kg. 

In the air coolers business, the company is optimistic of growth in sales in FY23, aided by favourable demand and key investments made by the company. The company has developed two new platforms of air coolers being offered as ODM solutions to customers.

In the plastic moulding business, the company has been focusing on the speciality plastics moulding business and gaining traction in the sanitaryware market. Riding on the tailwinds provided by the shift in the global supply chain away from China and impetus provided to the electronics industry by the incumbent government, the company intends to rebuild its electronics business. In addition to making PCB assemblies for LED TVs for few customers on an OEM basis, the company’s new LED TV manufacturing line in Greater Noida is expected to drive the growth for this segment.