Strengths:: SWOT Analysis

Air-conditioners have the highest market share in split air conditioners in India.
Carrier Aircon is
currently the largest manufacturer of comfort air conditioners (73% of FY00 sales) in India. Industrial
AC's account for 6% of the company's sales.

SWOT Analysis
Strengths:

First air-conditioning company to introduce the concept of a Comfort Shop.
First to develop exclusive dealer network in the country. Today, there are over 400 Carrier Aircon
exclusive dealers and 60 Carrier compressor dealers in India.
It has a strong setup, Willis Carrier Engineering Center, to provide technological support to develop
new products and upgrade existing ones.
It has successfully introduced finance schemes that have taken air-conditioners out of the luxury
category and made it affordable for the home buyer.
Carrier has a strong nation-wide infrastructure with around 20 offices and 400 odd exclusive
dealers.
Weaknesses:

Highly dependent on its parent company for R&D and technology support.
Opportunities:

Confederation of Indian Industry (CII) has urged the government to reduce special excise
duty(SED) on air-conditioners from 16% to 8% in the forthcoming budget.
Growing Indian middle class (approx. 250 m) characterized with low penetration level of consumer
durable.
Advent of internet provides an excellent opportunity to reach to a large base of customers and cut
costs.
Threats:

Likely to face fierce competition from domestic companies as they have well-acknowledged brands,
an extensive distribution network and better insights about the local market conditions.
Increased threat from cheaper imports, especially from China
Background

Carrier Aircon is the market leader in the domestic window air conditioner industry. It is a 51%
subsidiary of Carrier Corp, the biggest US maker of air-conditioning equipment and a subsidiary of
the $ 30 bn multinational United Technologies Corporation. The parent has been providing technology
for the products manufactured by Carrier Aircon in India. This gives the company the ability to
respond quickly to the changing market demands, introducing newer and more technologically
advanced products. Carrier manufactures a wide range of air-conditioners at its plant at Gurgaon,
Haryana.

Shareholding Pattern

The company has a share capital of Rs. 23.4
crore and number of total shares outstanding
amount to 2.34 crore. The face value per share
is Rs.10. The stock is currently, as on 18th
May, 2001, trading at Rs.95.80 and the market
capitalization of the company is around Rs.
224.17 crore.

Board of Directors

Ramesh C Sarin - Chairman
A K Srivastava - Managing Director
J B Dadachanji - Director
J T Bowler - Director
Jonathan W Ayers - Director
Nicholas T Pinchuk - Director
P C D Nambiar - Director
P S Dasgupta - Director
Robert E Galli - Director
Vijay P Gokhale - Director
Akhil Johri - Director
G Darnis - Director
G Raghavan - Alternate Director

Business Overview

The main line of activity of Carrier Aircon is air conditioners. As much as 70 percent of the company's
revenues come from window AC and split AC segment, with a market share of around 21 percent in
the window AC and 35 percent in the split AC segment.

The consumer durable segment can be segregated into consumer electronics (TVs, VCRs/VCPs and
audio systems) and consumer appliances (also known as white goods) like refrigerators, washing
machines, air conditioners (ACs), microwave ovens, vacuum cleaners and dishwashers.
Over the years, demand for consumer durable has increased with rising income levels, double-income
families, changing lifestyles, availability of credit, increasing consumer awareness and introduction of
new models. Most of the segments in this sector are characterized by fierce competition, emergence
of new companies (especially MNCs), introduction of state-of-the-art models, price discounts and
exchange schemes. There are more than a dozen companies operating in the white goods segment,
which is witnessing a huge capacity build-up. There is excess capacity in all the three sub-segments
(ACs, refrigerators, and washing machines) and supply is expected to continue to outstrip demand.
There is low penetration, in white goods segment with rural markets yet to develop due to
infrastructure bottlenecks. The factors hurting the growth of the industry are rising raw material
costs, competition from new entrants, stiff competition leading to higher advertisement expenditure,
delay of capital projects - as a result of shift to contract manufacturing.

Carrier Aircon's mission is - leadership in every segment of the Indian air conditioning industry
through advanced technology, high quality service and a full range of air-conditioning
solutions. Carrier Aircon plans to increase its retail network to 1,200 retailers, out of which 400 will
exclusively be Carrier outlets, 120- 130 will be direct retailers and around 700 retailers will be offering
multi-brand products.
The company plans to achieve a Rs 500 crore sales target by the end of the current financial year
March 31, 2001. In a bid to counter competition and be more cost competitive the company has
undertaken many strategic initiatives namely resolving of labor unrest, introduction of a new global
product range, launch of a new retail thrust in the form of dealer financing, warranty and increased
ad-spend.

Performance of segments

The sales breakup of the company for FY00 and FY99 are as follows:
Period ended 03/99 03/00 % Change

Sales value (Rs mn)
Chillers 184.2 232.7 +26.33%
Compressors 275.4 206.9 -24.87%
Room air conditioners 2,738.2 2,818.0 +2.9%
Stabilizers 6.9 6.5 -5.8%
Sales volume (unit)
Chillers (Nos) 1,811.0 2,027.0 +11.93%
Compressors (Nos) 37,393.0 28,779.0 -23.04%
Room air conditioners (Nos) 78,163.0 75,072.0 -3.95%
Stabilizers (Nos) 2,534.0 2,373.0 -6.35%
Unit realisation (Rs/unit)
Chillers (Nos) 101,692 114,797 +12.88%
Compressors (Nos) 7,366 7,189 -2.4%
Room air conditioners (Nos) 35,032 37,538 +7.15%
Stabilizers (Nos) 2,728 2,727 -0.03%

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Air-conditioners have the highest market share in split air conditioners in India.

Period ended 03/99 03/00 % Change

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