Blue Star increases outlay for Sri City plant to Rs 550 cr, eyes Q2 completion

Air conditioning company Blue Star said it began construction work on its Rs 550 cr manufacturing plant in Sri City in Chittoor district of Andhra Pradesh.

The plant will likely be included in the production-linked incentive scheme of government of India, under which companies are eligible to get around 5% of their sales as incentives from the government.

The construction of the first phase of 30,000 sq meters will be completed by July 2022, the company said.

“This facility will be operational by Q2FY23 and will primarily manufacture room ACs with a maximum capacity of 12 lakh units per annum,” it added.

It will primarily manufacture room airconditioners, deep freezers and water coolers.

Blue Star has filed an application for manufacturing of Heat Exchangers and Sheet Metal components at this facility in Sri City under the PLI scheme.

The plant was announced in March this year, along with another new facility in Jammu.

At the time, Blue Star had guided towards an investment of Rs 215 cr in both plants, including around 120 for the Sri City plant.

However, in its latest statement, the company committed to investing Rs 550 cr “in a phased manner..over the next few years” in the 20-acre, Sri City plant.

Blue Star had hired KPMG to optimize its manufacturing footprint. Based on the report, the company closed down its Thane and Bharuch plants, leaving five operational plants, at Wada, Dadra, Ahmedabad and Himachal Pradesh.

The two new plants are designed to augment the capacity.

“This [Sri City] plant will be highly automated and will ensure that the products manufactured are globally competitive. The Company is also planning to acquire IGBC Gold Rated Green Building certification for this Plant,” said Blue Star.

MD B Thiagarajan said it would be an industry 4.0 manufacturing facility.

The plant is located closer to Southern ports and this will enable speedy and efficient logistics management, the company said.

It will also employ around 1,500 people, besides generating indirect employment and cash flows in the region.

“Aligning ourselves to the ‘Make in India’ initiative and by leveraging on the PLI scheme by the Indian Government, we intend to manufacture certain components in-house at this facility. A firm believer in Aatmanirbhar Bharat, we are well on our trajectory to become one of the largest Indian manufacturers in the AC&R industry.”