The company has applied for the scheme under the AC components target segment

New Delhi: PG Electroplast Limited, a pioneer and leader in electronic manufacturing services and contract manufacturing, announced that it has applied for the Production Linked Incentive Scheme (PLI) for White Goods under the target segment “AC components” through its wholly-owned subsidiary PG Technoplast Private Limited. The company has committed a capex of Rs 300 crores over the next five years for manufacturing air conditioner components.

PG had already started the first phase of its planned investment to contribute to the expansion of the national component ecosystem. It is also building up its design and R&D capabilities to ensure that it is well-positioned to become a global leader for manufacturing ACs.

Commenting on the same, Mr Vikas Gupta, Managing Director – Operations, PG said, “That the government’s policies and directions are giving the industry such a major boost is reassuring. Our goals align perfectly with the government’s move towards an Aatmanirbhar Bharat, as it will help the industry become sustainable in the long run. We want to create a strong domestic component ecosystem in the nation. With this, we will be able to help India turn into a worldwide manufacturing powerhouse.”

In India, AC penetration is still hovering at 6% -7% compared to the 90% in developed countries. This provides a huge potential for AC manufacturing to grow, and PG is uniquely positioned to gain market share. The recent disruption in the supply chain caused by the pandemic and political tensions with China, in general, has boosted confidence about India, and many steps are being taken to make it an internationally preferred manufacturing destination.

The PLI scheme is aiming to substitute the current imports of components, which stood at INR 110bn last year, through a reduction of the disability factor by 5%. The outlay for AC components in the scheme is INR 5000 crores. The incentive rate is 4-6%, and the output over the next 5 years is projected to be almost INR 1.25tn and 4 lakh new jobs. The industry bodies such as CEAMA and RAMA expect annual sales to reach INR 1tn vs. INR 198bn currently by 2030. The scheme is expected to increase domestic value addition in the manufacturing process from 25% to 75% by 2026. This should also make PG competitive globally, which would open up opportunities for exports from India, which will in turn help reduce the seasonality of the business too.

The company has been able to post revenue growth in FY2021 and strengthen its balance sheet despite COVID-19 related shutdowns. The Washing Machines business has witnessed strong growth and posted 37% growth in 12MFY2021. AC IDU business also posted a very strong growth of 41% in 12MFY2021 despite a significant loss of sales in 1QFY2021. Overall Product business is up 30% YoY in 12MFY2021.  

This scheme is a game-changer in the industry in India, as it will bring about advances in innovation, R&D and upgrade technologies deployed by Indian manufacturers which should help the sector to go from making in India to making for the world.