Energy efficient water heaters were the earliest product introductions from A.O.Smith in the Indian market. Ever since then, the company has banked heavily on a combination of providing good product quality backed by a strong service network. This placed AO Smith amongst the top players in the market. Today, the company, with a strong manufacturing base in India, is seen as a major player in not only the energy efficient water heaters, but also in water purification solutions – another category which bank heavily on after-sales service. And for the uninitiated, A.O.Smith not only has products for the residential market but also offers a whole range of solutions (in addition to water heaters and purifiers) for the institutional segments like hotels and hospitals. Buildingandinteriors.com in conversation with Mr.Parag Kulkarni, Managing Director, A.O.Smith Water Products Pvt.Ltd.
B&I: A.O.Smith entered the water heaters market with new technology and a strong focus on service. How do you look back at the journey till now and what are the challenges still?
PK: Using its global expertise, A.O.Smith has redefined the water heaters market in India with its path-breaking technologies and superior aesthetics, adapting to the Indian lifestyle and needs. Subsequently, we launched our water purifiers with relevant and latest technologies to make an indelible impact in the Indian market. Today, A.O.Smith is a highly respected and an established brand in water heating and water treatment with style, quality and technology being its hallmarks. A.O.Smith places utmost importance on service and has a strong service network covering the vast geography of India. We are confident that we will continue to set benchmarks in the industry with our innovative products and efficient service delivery, thereby redefining the categories we are present in.
B&I: What is the percentage split of your revenue contribution from residential and commercial solutions? What are your plans to make deeper inroads in the other segment (with lower contribution)? Do you have plans to get into the mass-market (affordable) segment?
PK: We are performing well both in residential and commercial segments, with a strong product portfolio and robust sales, distribution and service network. Going forward, we will continue to explore untapped consumer segments and geographies, both in residential and commercial businesses. Our approach has always been on customer value creation rather than focusing on mass-market segments and we will continue to do so.
B&I: What are the solutions you have for the commercial segment hotels, institutions, offices, etc.?
PK: In water heating, we are one of the top players in the commercial segment in India. We have a large and a wide portfolio for hotel & hospital segments, some of our product lines are hot water generator systems like air to water heat pumps, natural gas based water heaters, high power electric water heaters and oil –fired water heaters. For institutions & offices, we have heat pumps with storage capacities ranging from 500 liters -1000 liters, natural gas solutions and electrical storage water heaters with high power.
B&I: What kind of support systems and services you have for Architects handling institutional projects? Are you satisfied in terms of your reach among such architects or you feel that there is a lot be done? How do you plan to further strengthen your market for commercial solutions?
PK: We have a robust ecosystem to handle large institutional projects. This comprises regional level teams having expertise in providing apt consultancy to the specifiers for selecting the right technologies and capacities. Typically, turn-key solutions are executed by our trained channel partners in the supervision of A.O.Smith experts. In terms of our reach, we need to expand and strengthen our footprint tapping the Architects in the non-metro markets- this is a potential area of growth for us. Coming to application, we see a big opportunity in swimming pool heating solutions with high capacity air to water heat pumps.
B&I: With energy efficient water heaters, which keeps the prices higher, how do you compete with local brands which fall in lower price brackets? Does it make you less popular among the developers and contractors, as they are quite price sensitive?
PK: A.O.Smith provides a value package to the developers – great products coupled with the right consultation and service. This is our differentiator. We refrain from getting into a price war with local or cheap alternatives. We strive towards delivering product and service excellence while maintaining an excellent customer lifecycle management. Expectedly, we are the preferred brand amongst the top MEP Consultants and specifiers across India.
B&I: How has the post-Covid19 situation been for your business? What measures are you taking to mitigate the effects of the pandemic and resulting social distancing norms? Would it reflect in the way you are seen in the market, like at point of sale?
PK: Recent times have tested the mettle of businesses and have shaken them to the core. However, businesses which have their fundamentals strong, are focused towards the consumer and are adaptive, will thrive and do well. We need to turn this challenge into an opportunity to build a workplace of the future that is responsive, flexible, resilient, and most importantly, people centered. These days, we have been constantly communicating with our partners-retailers, dealers, distributors, specifiers and vendors, aligning them of the various developments, making them feel as an integral part of our team. From a channel focus perspective, there is a high impetus on digital platforms and e-Commerce, with expected surge in online purchases due to social distancing.
B&I: With a lot of companies across sectors contemplating going digital in a big way, what are your thoughts on that? Do you also plan to explore this territory?
PK: A.O.Smith India has been focusing on digital in the past few years in a consistent manner leveraging owned, earned and paid platforms. This has given a strong foundation for us to be aligned with the current situation which we believe, will see an incredible traction of online transactions in the next few months. We are one of the most active brands in our categories on E-Commerce and we are focusing to further strengthen our presence this year through focused product offering, differentiated marketing and service activities.
B&I: Where do you see the next big opportunity for your company? What are the growth drivers going to be for you over the next 3-4 years?
PK: Both water heaters and water purifiers categories are having relatively low penetration, even in the urban markets. Increasing urbanization, rising disposable incomes, more nuclear families, growth in real estate, increasing digitization and connectivity are going to be the main growth drivers in the next few years. This provides a great opportunity for us as a brand.
B&I: Is technology going to be the major differentiator in the energy efficient water heaters and purifiers in times to come? Or we will still grapple with price issues despite usage of advanced technologies?
PK: In near future, relevant technology driven by insightful innovations will be the differentiating factors in both water purifiers and water heaters. Brands that will focus on consumer value creation, rather than price war, will succeed and do well.
B&I: Coming back to energy efficient water heaters, do you have any plans to introduce new products that are even more energy efficient, sustainable, use renewable energy and clean technology?
PK: We have always believed in introducing products that are environment friendly and sustainable. Over the years, we have introduced numerous products like air to water heat pumps. These work on with renewable energy source. Than, we have the residential water heaters that have the highest level of energy efficiency ratings given by the BEE (Bureau of Energy Efficiency), etc. Additionally, our latest introduction, HeatBot comes with advanced energy saving features like Smart timer (Auto On and Auto Off) and Energy Meter.
Our most popular water purifiers range – the Green RO series, comes with Advanced Recovery Technology that saves 2X more water compared to an ordinary RO purifier. This year as well, we will continue to introduce products in both water purifiers and water heaters that are sustainable, energy efficient and so contribute towards a greener world.