Low customer awareness a major hurdle Rabin Ghosh Mumbai Value for money The centre had set a deadline of April 1 as the deadline for AC manufacturers to rate their products on a score of one star ( least efficient) to five star (most efficient) Now it has pushed the deadline to June, although the official notification is yet to reach the manufacturers Energy – efficient ACs will bring down running costs drastically. So, if more customers gravitate towards higher starred ACs, industry margins are expected to improve With energy labeling set to become compulsory for air conditioners (ACs), manufacturers are rushing to get their products rated even as customer awareness to such ratings remains low. Going forward, companies see benefit from possible margin expansion since they would have the headroom to price energy efficient models at a premium to the less energy efficient ones. Government had earlier set deadline of April 1 as the deadline for AC manufacturers to rate their products on a score of one star (least efficient) to five star (most efficient), Now it has pushed the deadline to June, although the official notification is yet to reach the manufacturers. The AC demand in the country is seen at 2 million units this year, a third more then a year ago. “ Prower efficiency for ACs is very critical since it is one consumer durable product where the running cost out- strips the capital cost,” says George Menezes, chief operating officer, Godrej Appliances. For a refrigerator, which costs about Rs. 10,000 the running cost is about Rs.100 per month. In the case of an AC,where the prices begin from Rs.15,000 the monthly operating cost could run to several thousands. Hence, even though government notification isn’t out yet, manufacturers have begun to market rated products. “On an average, our cost per unit has gone up by Rs. 1,000 (to increase the efficiencies of the ACs) On the pricing froot, a 1.5 tonne split AC with a two star rating costs about Rs 22,500 while one with a four star rating costs Rs 26,500. So, while the customer slightly more for an energy efficient AC, he saves on lower running cost,” Sanjay Johri, chief operating officer, unltary products business group, Voltas said. Hence now customers will have a real energy efficiency benchmark and if more and more of them gravitate towards higher starred ACs, industry margins are expected to improve. However, customer awareness is still a grey area. “We feel that customer awareness on rated products is low even though our products are available in the market for a while now. The awareness level would take some more time to build up, said Madhav Nene, deputy general manager, marketing Electrolux. Nene says energy efficiency rating is will not be the only differentiator in the market. “ The star rating is on the compressor. A customer doesn’t buy the compressor alone. Hence it is an overall product features, along with energy efficiency which makes up for the purchase decision.” On the other hand, Johri says energy efficient ACS have been at great demand at whichever consumer exhibitions the company has taken part. “We have sold higher rated ACs than lower rated ones.”