EPACK Durable Pvt Ltd is raising Rs 160 crore ($21.4 million) from private equity firm ICICI Ventures, the management of the second-largest contract manufacturer of room air conditioners (RACs) told Mint.
EPACK has facilities in Dehradun where it manufactures RACs and small household appliances (SHAs) for Indian and MNC brands.
It currently has an installed capacity of over one million RAC and one million SHA units and the infusion of fresh equity capital will help the company to expand capacity.
The company targets to increase its RAC capacity to 3.0 mn units per annum by 2025.
“RAC penetration in India is lowest with penetration in 7-8% households only. Over the last two decades, EPACK has been building capabilities to manufacture RACs and SHAs. We have built strong business relationships with all key brands. The new capital will help us deepen our manufacturing and R&D capabilities, and gain more market share over the next four to five years,” said Sanjay Singhania, promoter director at EPACK.
The company manufactures a range of RACs including window ACs and split ACs. It also manufactures home appliances including induction cooktop, mixer grinders and water dispensers.
The company has plans to invest Rs 500 crore in the next 4-5 years to expand its capacity and is already in the process of setting up a facility near Bhiwadi in Rajasthan which is expected to be commissioned in the third quarter of the current financial year.
It has also announced its plan for setting up a plant in South India which is expected to be operational by the third quarter of 2022.
The company ended FY21 with a turnover of Rs 760 crore and is aiming at a revenue of Rs 1,100 crore in FY22, said EPACK chairman BL Bothra.
“We are also focusing on SHAs as that is also a growing market. We will also expand into manufacturing components for RACs and we plan to invest Rs 300 crore for this under the production linked incentive scheme announced by the government. We have already applied for the PLI scheme,” said Bothra.
Currently, the home appliances business accounts for just 11% of the revenue, but the company plans to increase this to up to 20% by 2025.
“The AC market has huge tailwinds. AC penetration in India is very low compared to China, where the penetration is over 100%. The Indian market size is just seven million units, while China is 80 million,” said Bothra.