Daikin Airconditioning India has acquired the air handling business of Ahmedabad-based Citizen Industries, a move which will enhance its product positioning into the commercial air-conditioning market, a top company official said. The move would help Daikin to strengthen its presence in the fast-growing commercial air-conditioning market and expects the segment to increase its contribution up to 35 per cent of its turnover from next year.
Moreover, this would also establish Daikin as a complete player into the domestic commercial air-conditioning market offering a complete solution into the segment.
According to the industry sources, the deal is estimated to be around Rs 100-125 crore.
“This will have a synergy with our existing product sales,” Daikin Airconditioning India MD & CEO Kanwal Jeet Jawa told.
Integration of the Citizen’s business would result in acquisition of ongoing air-side maintenance contracts, expansion into the applied and VRV solution business (including airside), a horizontal collaboration with American Air Filter (AAF) and catalyse economies of scale at the Daikin India Neemrana, Rajasthan factory and its R&D centre, he added.
“This is the fourth largest manufacture and distributor of applied secondary equipment. It has large sales channels in the pharmaceutical industry and others,” he said.
Citizen Industries has manufacturing units at Ahmedabad and Bengaluru, employing around 650 people which includes R&D engineers and service technicians.
Air Handling Units are mainly used for maintaining air quality such as cooling, heating, humidifying, dehumidifying and filtration. It is also used for air quantity and circulation of air in the specified area through properly designed air distribution network.
“This acquisition will provide prominence to Daikin India’s current infrastructure influence and help increase penetration across various applications,” he said.
Daikin India has done air-conditioning projects of around 32 airports in the last three years and with this acquisition, the company can now provide airside maintenance and insulation service also, Jawa said.
This will also strengthen Daikin’s collaboration with its step down firm AAF.
“Now we will have a full range – controls, the applied chillers and airside. This would also accelerate our cost reduction by utilising the Nimrana, Rajasthan based procurement R&D centre. The merger would also help to upgrade some of the products at the same time and using the cross company benefit,” Jawa said adding that it will also benefit its customers also.
However, he did not share the amount but said the company would continue to look for such opportunities to be a leading player into the Indian residential and commercial air-conditioning segment.
“We have reserves for acquisitions and wherever we will see an opportunity to acquire which is related to the business of air conditioning, we are going to use that,” Jawa said.
Daikin Airconditioning India’s business last year was worth over Rs 5,000 crore and around 75 per cent of it came from the residential cooling business and the rest from commercial business.
“With this enhancement, our commercial business will go up from 25 per cent to 35 per cent next year onwards. This will enhance our position in the segment,” he added.
According to Jawa, after COVID-19, the ventilation requirements have gone up.
Source: Economic Times