Virtual Forest Launches a State of the art inverter AC solution

Virtual Forest, an Indian startup that prides itself on being the Virtual Lab and Virtual Factory for the Indian Home Appliance industry has announced the launch of its State of the art inverter solution for Air Conditioners, based on the latest motor control and power electronics technologies from Infineon AG. The VF solution outperforms the competition in ISEER (Indian Seasonal Energy Efficient Ratio as notified by the Bureau of energy efficiency) and reliability benchmark testing. The VF solution is reactor on board and suited to AC/BLDC indoor unit and outdoor unit motors and incorporates advanced connectivity features. Indian Government banned the import of air conditioners– both split and window – with refrigerants. “Import policy of air conditioners with refrigerants …is amended from free to prohibited,” directorate general of foreign trade said in a notification (No 41/2015-20, issued on October 15, 2020. According to analysts, this may be a near-term disruption for the industry. With the industry’s total import dependency at almost 50%, Motilal Oswal (a leading industry analyst) believes that this development would imply greater business to OEMs (tail end players would opt for Indian OEMs at first) as well as consolidation led gains for leading brands. The Indian AC industry is estimated to be Rs 180– Rs 200 bn, with Rs 45 bn of finished goods imports and a similar value of component imports. The total imports under the banned HS Code of 84151010 & 84151090 stood at Rs 36 bn in FY20.The Electronic Industries Association of India (ELCINA) welcomed the ban as it is expected to have a positive impact on domestic manufacturing in the long term. It hoped some of the loop-holes (such as a ban being effective on only import of AC units with refrigerants) would be addressed. Speaking on the latest development Rajoo Goel, Secretary-General of ELCINA said “We welcome the step taken by the government as this will encourage domestic manufacturing of ACs and associated electronics in the country, giving a boost to employment and new investment in setting up of manufacturing facilities. It is hoped that the companies relying solely on the trading business model will now migrate to either setting up their own plants and working with companies like Virtual Forest, to maintain their market position”. Virtual Forest new solution which is best in class will be a lifeline to Indian brands, who now need to re-work their supply chains and rely on locally manufactured Air conditioners, after the total ban on imports. India’s AC industry is highly competitive, with a total of 35–40 brands of which the Top 6 players enjoy almost 80% market share. Near-term gains notwithstanding, over the longer term, analysts foresee a disruption even for leading brands. This is because the business models of the Top 5–6 players vary drastically. Motilal Oswal sees the capital intensity going up for leading brands as well, as they need to scale up local manufacturing. This is where, Virtual Forest, with its large manufacturing base, having the capacity to scale up production in the short term is slated to play a vital role.