Carrier Airconditioning & Refrigerators Ltd - Stock Valuation and Financial Performance

Carrier is a part of United Technologies Corporation (UTC), USA. With 2008 revenue of $58.7 billion, UTC is a conglomerate operating in the high technology space. The UTC group operates in aerospace and building systems with companies like Carrier (air-conditioning), Otis (Elevators), Pratt & Whitney (Jet- engines), Sikorsky (Helicopters), UTC Fire & Security (Chubb & Kidde), Hamilton Sundstrand and UTC Power.

Founded in 1915 by Willis Carrier, the inventor of modern air-conditioning, Carrier has developed into being the world’s largest provider of air-conditioning, heating and commercial refrigeration systems (HVACR) with operations in more than 170 countries, employing approximately 41,000 people worldwide and revenues of $14.9 billion in 2008. Over the decades, the company’s name has become synonymous with reliability, innovation, commitment, superior technology, cutting-edge manufacturing and world-class performance. It also has one of the most prestigious installation bases in the world.

Carrier started its operations in India with setting up of companies namely Carrier Aircon Limited in 1986, and Carrier Refrigeration Private Limited in 1992. Carrier brought to the Indian consumer, access to advanced technology and air-conditioning and refrigeration products from the worldwide product portfolio of Carrier. In October, 2006, Carrier Aircon merged with Carrier Refrigeration and the name of the merged entity was changed to “Carrier Airconditioning & Refrigeration Limited” (Carrier India).

Carrier India's manufacturing facility at Gurgaon produces air conditioning equipments including Window Room Air conditioners, Hi- Wall Splits, Slimpak Splits, Cassette Splits, Ducted Splits and Chillers. It also manufactures Refrigeration Equipments including Cold chain equipment comprising of Cold Rooms, Truck Refrigeration & Bus Air-conditioning system, Freezers, Visi Coolers & Super Market Products.

Carrier India pioneered HVAC dealer concept in the country to give an unparalled experience to its customers. The company has built a strong distribution network on a platform of partnership and trust. The company boasts of a strong network of over 590 sales and service dealers and 1000 distributors and retailers. The cornerstone of the company’s distribution is the Willis Carrier Club Dealer (WCCD).

Willis Carrier Club is a nationwide endorsement of the company’s best dealers in the country. This endorsement not only gives unique identity to the dealers, but also helps drive customer satisfaction through ‘expertise,’ ‘the hallmark of Carrier’, the inventor of modern airconditioning. Apart from the national traditional channel, the company has also developed relationships with most of the organized retail chains in the country.

The company is one of the first to adopt the energy efficiency label issued by the Bureau of Energy Efficiency (BEE) - Awarded the First prize for energy conservation in Consumer Goods Sector in 2007 and 2008 by the Ministry of Power, Govt. of India. The company has a network of over 475 service dealers and 90 service franchisees to provide a range of services.

The company currently has a 27 per cent market share in total. As much as 70 per cent of the company`s revenues come from window AC and split AC segment with a market share of around 21 per cent in the window AC and 35 per cent in the split AC segment. The company plans to increase its share in the central plant segment from the current 14 per cent. Carrier has a strong nation-wide infrastructure with around 20 offices and 400 odd exclusive dealers.

Single number Call Centre

• Operational in 7 languages for easy communication with customers

Web based CRM package

• Tracking of all customers’ complaint

Training for field technicians

• Quality and prompt repairs

Retail AMC Docket for residential customers

• Trouble free operations of the unit

Service Infrastructure

• Model service infrastructure for providing service with speed

Recent Developments

Carrier International Mauritius Ltd (Carrier Mauritius/acquirer), a company registered under the laws of Mauritius, along with Carrier Corporation (Carrier Corp), a company incorporated under the laws of Delaware, USA and Carrier Singapore (Pte) Ltd (Carrier Singapore), a company registered under the laws of Singapore, as persons acting in concert (collectively referred to as persons acting in concert), made a voluntary offer to public shareholders of Carrier Aircon Ltd (Carrier Aircon/target company) to acquire up to 32,12,268 fully paid equity shares of Rs 10 each (13.71% of paid up equity share capital and being balance outstanding capital of Carrier Aircon) at Rs 100 per share payable in cash. The offer is not conditional to any minimum level of acceptance.

Carrier Mauritius holds 82,65,315 equity shares (35.29%), while Carrier Singapore does not hold shares in the company, while Carrier Corp presently holds 119,46,056 equity shares (51%) as on the date of this public announcement. Carrier Corp is the promoter of Carrier Aircon and is in management control of Carrier Aircon.

The company, leader in reciprocatory compressors, and have recently launched rotary compressors based air conditioners for high ambient conditions. The new range of rotary compressors based air conditioners had been especially designed for India. The company had recently launched its `P` series high wall split system in Delhi and a few countries in Asia.

Recently, Carrier Aircon announced a Voluntary Retirement Scheme for its workmen based at Gurgaon factory. The company is re-sizing its employee’s strength.

Future Plans

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.