 Please join me in welcoming our keynote speaker, Mr. B. Tiagarajan, the managing director of Blue Star Limited in Conversation with Rohel Amin, a senior editor of Exchange for Media on the topic Blue Star Built on Trust. With this, I'd like to humbly welcome Mr. B. Tiagarajan. Thank you so much for your valuable time and of course, Rohel, it's so great to have you back on the screen and I'm sure the conversation is going to be really good. We look forward to the nuggets of wisdom being shared now on the screen. Over to you, Rohel, to take it forward. Thank you. Thank you, Bhavna. And thank you, Mr. Tiagarajan, for joining us. Really thrilled to be doing this session and this conversation with you. I just want to put a small context before I start my first question. You know, in a world where thanks to technology, clients have more choice than ever before, conversely choosing a product or service has become a lot more challenging. You know, buyers are certainly willing to put in the research, but what everyone really wants is a shorthand, a shortcut, something to make those decisions faster and easier. And that's where the trust factor comes in. And of course, your brand has done it very well. I mean, it's a research in itself, you know, to understand how you have built trust over the years. And my first question, Mr. Tiagarajan, is also your tagline for Blue Star is, you know, build on trust. Give our viewers a sense of how important has this trust factor been for building brand salience. Thank you. First of all, I'll begin by complimenting exchange for media group and the entire marketing fraternity for giving me an opportunity. This is a very important even I don't think in marketing, we have a larger event than this. Many youngsters look forward to that. And over the years, how you have reinvented yourself in this particular format is indeed impressive. I am very grateful and privileged to talk to you. I also would like to begin this by, you know, in one of the posters here, I have got Mahatma Gandhi's quote. But till today, I wasn't aware that this has got something to do with our brand itself. Okay, it was lost in many of the posters that is there, I know that is there. The court is, I believe in trusting. This is Mahatma Gandhi. I believe in trusting trust because trust suspicious is quoted and only stings he who trusts has never lost in the world. That is his quote. And it is remarkable that he had figured that out many decades ago. Now, Blue Star was not a B2C brand, it was a B2B brand, we were in central air conditioning and commercial refrigeration to begin with. So if you look at before 90s, they believed in leadership. So while communicating with the audience, it was like that that we are leaders in central air conditioning that is how the other brand building activity began. But prior to that, it was all in actions. The founder Monty Adwani subsequently, Mr. Sunil Adwani, Mr. Ashok Adwani, they all believed in one particular element of the values and beliefs is that putting companies interest ahead of the personal ones. And in that context, actually putting the customers interest first, they were not interested in, you know, enhancing their profits or seeking glory by, by proclaiming something what they cannot deliver. It was his own words that I take pride in getting the job done then. So this was the beginning of that journey that we all took pride in getting the job done then. So within Blue Star, even, you know, I joined Blue Star when me in 1998. And from that on, I have seen that the question is that what you want to promise to the customer, please promise what you can deliver. This is the first principle. The second principle is that even today, Mr. Sunil Adwani and Mr. Ashok Adwani will ask, look, you stated this in the media, are you sure you will deliver? Every interview, they will, if they pick up something that I have promised, they will be picking up the phone or send a WhatsApp message, are you sure you will deliver? That is very important to them. So this whole thing is also the credo of Blue Star, that I am Blue Star. I take pride in delivering a world-class customer experience though I empower the people and ensure that you are able to deliver what you promise. This is where the journey began. Now, we went on to migrate to a different communication that we are customer focused professionals. That was in the year 2001. So that translated into Blue Star Breathe Easy, where you are in the hands of the experts and if you give something to Blue Star, you can relax. That is how that brand was built. Then we migrated to that if I am working with a customer, if a customer has trusted me, I should benefit him. So that migrated into another value proposition. This was from 2003 onwards, where we said that cooling solutions to help your business do better. So therefore, in designing a cooling solution, every business, whether it is IT or retail or healthcare or hotel, every customer segment, we started building competence or the domain knowledge there so that my solutions will help them do the business better, whether it is air conditioning or refrigeration. We got into the residential space. Now multinational scanning and we were new to B2C space. We went ahead and migrated the same strength we had in the B2B path into takeoff is like cooling home, which means that superior air conditioning solution I will deliver for a residence itself. Now, when these businesses were growing, we also got into other businesses like MEP where coming electrical. There is one professional electronics business in which we are leaders in certain segments like the data security solutions and all. So we wanted one common thing which defines Bluestar, that the consumer insight studies across whether it is a focus group discussion or individual discussions. It revealed that it is the trust which is helping Bluestar to shine even in the highly competitive environment multinational that come in and we are dealing in high tech products. So therefore, we went ahead and said three, four years ago it was that Bluestar built on trust will be the proposition it is the overall key value proposition that comes from Bluestar. That is how the journey began. Absolutely, I think it's a fair amount of, you know, it takes time to set up those expectations and then constantly deliver on that. I mean, that's the critical point of building that trust where Bluestar has been exceedingly well. So I also want to understand that in today's digital world, you know, where the memory span is short, it's in seconds, I guess, you know, we're hopping from one platform to another. You know, major factor, you know, is retaining that, you know, the customer mind share, for example, giving a sense of what are the bigger challenges in sustaining brand trust in such a context where people are just having a two or a five second attention span for a legacy brand such as yours. Very pertinent question. And I think it is a challenge which we are continuing to deal with. I will tell you, it is not only the advertising or promotion part of it. E-commerce is another element where I suspect in before clicking buy or add to the cart, anybody is paying attention because I have a complaint. E-commerce drives this Yelvan lowest price. So that is another challenge. I don't mind accepting that. Now, what we have figured out is that, A, your communication has to be consistent that any marketing person will be aware and you should be consistent in communicating with them. You should be consistent in delivery. Now, the second part of it is your communication will have to be clutter-breaking and your communication will have to be delivered in an authentic manner and you should live up to that communication. So let's say a roommate conditioner. If we are saying that nobody pulls better and at the end of the day if the customer has bought it and whether we are living up to that promise and we have said that built on trust, which means the delivery time that I promised I have fulfilling and the product is reliable and it conforms to certain energy efficiency and other regulatory requirements that I have fulfilled that and he is fully looked after during the lifecycle of the product. That has to be demonstrated outside. Now, in communication you have seen that we felt that we need definitely a brand ambassador we brought in Virat Kohli and that he an element where the people can connect with him. Given the fact that the 65 to 70% of our customers are from tire 3, 4, 5 ounce and we find that most of them are first time buyers of a conditioner and in that context we felt that we need a brand ambassador also to add to our communication and bring in some element of humor so that you will be able to break the clutter. Now, in the recent years we have learned that look, I am feeling that this 30, 40 second TV commercial days are over. It's all becoming some in second. Yeah, so the thing is, we have figured out that we are doing well in terms of the skippable ads in digital medium that the people are not skipping that we get very high scores people going through the ad fully. So that challenge has been overcome. We believe it is in terms of simple communication consistent communication clutter baking communication with some kind of humor. This is one part of it. The second part of it in a B2B part of the business, this has to be built in multiple ways that we invest substantial amount of money in creating content for the people to consume in terms of knowledge. There are quite a few like you will find a blue star guide to hospital air condition blue star guide to air conditioning of educational institutions and there are so many webinars that are being done. So therefore there the you you don't have this problem you will be in a position to get the captive audience for you to communicate adequately. The dealer showroom, you, we are again, the in shop demand status or the dealers are doing it, the communication is created in such a manner, one or two aspects of it, which are highly differentiated are communicated to the customers or the potential customers who are walking in. Right. Right. Mr. Thialgras and you raised a very valid point of clutter breaking communication and you also stated how humor, you know, has been a cornerstone if I might call it of all your marketing community, most of your marketing communication. Here I want to understand the brand ethos when it comes to marketing and the role of innovation. How do you ensure that, you know, you have the, you've got the pulse right and the communication targeted and nobody is pressing the skip, skip button. Say, say, for example, you I know very well that most customers are looking for cooling, you know, when buying an air conditioner. So you need to constantly invest in the consumer insights. This, and India, you cannot look at it as one market, you have to look at North, South, within North, different markets like Punjab is differently than NCR, so on and so forth. So number one is that invest in getting the consumer insights right. This is very, very important element. The second part of it is we know very well that the people are buying for just cooling, that's what the air conditioner does. Within that, what is that particular element which can resonate with the consumers. At some point of a time, we had discovered this, the consumers are, you know, like the blue star brand has to be seen in the context of many multinationals present day. So therefore, we were, we were trying to create communication where this product is world class, it is the most innovative one. So if you look at the history, we were the first one to come out with decimal cooling, like if you want 24.5 degree centigrade, 23.5 degree centigrade, you can set it in the air conditioner. So at some point of a time, the communication was that. The second part of the communication was that the powerful cooling, that it can handle multiple people there. So therefore, the communication was if you recollect the Virat Kohli and the look-alikes. So that communication in order to make it humor, make it interesting, we brought in look-alikes of Virat Kohli to say that many people walking into the room also the air conditioner can deliver its capacity. Now we understood that right now, when your market share has grown, you are addressing large audience and you are addressing bottom of the pyramid, we need to go ahead and communicate. It is the fast cooling. The people want to switch on the AC and immediately it should start cooling. So one end, you develop a product according to that value proposition, then go ahead and deliver that through a communication. Say for example, we have just launched another campaign, which will be playing in the IPL and other channels. Like Virat Kohli is napping his fingers and he says that this is an advertisement, which is a very fast one and it is going to end. And it is for a fast cooling AC and before somebody can click the skip button, the ad will be over. That is how it is created. So therefore, you have to figure out a product feature which will be appealing and relevant to the consumer through consumer insight, convert it into a communication and figure out a human element. Absolutely, that's what great companies all about. So if we look at your last year's results, revenue surpassed pre-pandemic levels and we are also at the start of the peak season for AC cooling sales. How are you looking to close the year? The Q3 results is in the public domain. We grew faster than the market. We improved our market share and we find the demand sustaining over January, February, March itself. Now the forthcoming summer season will be after two summer seasons having got washed out, 2020 summer as well as 2021 summer. So the build up to the summer season, the primary sales as well as the secondary sales are good. Now we are on a pursuit to improve our market share by 2024 to 15%, which is somewhere around 13.25%. Now we will improve it to 14 in the coming year. We will improve it to 15. Now the whole growth story is happening despite disproportionate or unprecedented price increase due to commodities. As we are speaking now, every day the some element of the cost is going up. Now, I think the growth is happening because of the penetration levels and the severity of summer. And the other element is that people are spending more time at home and they are going ahead and equipping themselves. The air conditioner as a category is the penetration level is just seven percent. And I think next to four to five years, this will rapidly grow and it is in that particular stage as it had happened for refrigerators or washing machines at some point of time. So if you want to look at one category that will rapidly grow, it will be air conditioners. Now, what we are trying to do, therefore, in order to grow our market share to that 15%, it is important for us to address the belly of market, therefore, make the product more affordable. Therefore, the entire product range has been rigid completely. So there is some element of cost increase due to commodities, but at the same time to decide innovation, we have made the products affordable. So one hopes that this summer season is an exciting one after two years of washing. Right. I won't come to this commodity price that you raised in your response. So we have seen an increase as high as 30%. So far, of course, Bluestar has not passed this cost to its consumers. But are we likely to see an increase in price if it stays the same way? Bluestar has passed on to the consumers. My board will sack me if you are saying they have not passed on. The price increase was on March 1, 2021, again in July 1, 2021, again in October 2021. So there were three price increases. Now, we were the first one to do in the market and there was huge resistance. You can imagine it's a year of pandemic and you are coming out of wave two and the market is opening up and the prices are going up when people are trying to buy. So if you look at our Q3 results, despite three price increases and unprecedented increase, not only commodity prices, it's also the ocean price cost. You will notice that the margin eroded by 150 basis points or 1.5% eroded by Q3. Now, our stated objective was that by the Q4, we will maintain the same margin levels as Q3. So we had no intention to increase the prices during this quarter. So we felt that what we have increased is enough because you determine your price by what the competition is doing. The war and the sanctions have led to, in the speculative market, metals are being booked at very high prices and we know the supply chain descriptions will be a real challenge to face. Therefore, as against our original statement that we will revise the prices by middle of April. In fact, we have taken a decision to revise in the April first week itself. And with the promise again, I'm connecting it with the trust. This trust element is not only for the consumers, right? That we need to display this and demonstrate it across the value chain, whether it is our principles, whether there are vendors or business associates, dealers, and most importantly, the shareholders. So, whenever the commodity prices have gone up, you can look at the record that I would have been the first person to disclose to the market that there is a price increase and we are going to increase the price. We had maintained that consistently this transparency. To the dealers, we have maintained that transparency that I need to increase the price. This is what we are going to do. Same way, even last week I have stated this, this price increase which is going to take place in April is because of the war, conflict. Now we will monitor this. If the prices soften, we will revise it downwards. That is where you demonstrate the trust to your trade as well. Right. So we are also in the midst of a heat wave in many parts of the country and the focus for Blue Star has shifted to tier 3, 4 towns in India as well. Do you think small towns in rural India will be the big drivers for growth now on? It had been for the past three years that steadily they share a distance for Blue Star, increasing now 65% of the sales coming from tier 3, 4, 5 markets. So if you look at a dealer award ceremony, the dealers who win the awards will be from small towns. That is another indicator. One another indicator is they are all first time buyers. The consumer finance scheme close to 45% of the consumers are buying through that 0% finance scheme. So it is very clear. I am of the opinion, not only in this category, in most categories that the growth is going to be driven by aspirational middle class. Growth is going to be driven by tier 3, 4, 5 towns in case of B2C. Growth will be driven by MSMEs in case of B2B. So I think the marketeers should keep in mind this particular factor in deciding their marketing strategy or the marketing communication strategy. So when it comes to your brand, there is another observation which is that the brand strategy of mass premium with the proposition of affordable yet best in class differentiated ACs has seen product expansion, particularly in the affordable category. So what is the next product expansion in the pipeline on this front? Are there any more? Would you please share some of those details with us? We have figured out in markets such as Punjab or basically Uttar Pradesh and not in a belt in general. They are looking for the duty AC. So therefore we are launching quite a few models which are heavy duty in nature in the sense that even at 55 degrees centigrade without D rating. So what happens in air conditioner is when the ambient temperature goes up, it delivers lesser capacity. It gets D rated. But at 55 degrees centigrade, it can deliver full capacity. This is one particular area which we are covering in our product range. The second one is with regard to the energy level change. Once in two years, the energy level changes. Like what is 5 star? Today post the energy level will become a 4 star or 3 star. So the next energy level change is going to be on 1st of July 2022. So consumer buying now before the summer. He may buy a 5 star. He should not wonder that post 1st of July it has become 4 star like that. Because in the perception, the energy level norms have changed. So therefore we are launching quite a few products which are future related. So that is taken into account that that is being done. The next one is with regard to the, when you are going to tire 3, 4, 5 towns, it should withstand the voltage fluctuations. Of course the power quality is improving. So why somebody should spend some 40, 4000 rupees or 3000 rupees for a voltage stabilizer. And therefore the products are being redesigned for handling a very wide range of something like 155 volts to 270 volts that voltage fluctuation. That is the next part of it. They will be like urban customers like Delhi, Mumbai where they are concerned about purified air or virus protection. The air conditioners, there are quite a few models which will eliminate the air purifier. It has got to engulf the air purifier. Then we are finding that the average age of a buyer over the years are coming down. You know that in the 80s the average age would have been some 50 plus. Today the average age of a buyer has come down to 30 to 35. And which means a lot of youngsters are also decision makers, both male and female. And for them the technology is important, say for example Wi-Fi, radio air conditioners. So therefore the technology element is also being dropped. Right. Please go on. Yes, you want to add to it. So therefore the factor of the matter is that go ahead with the consumer inside studies and they keep on introducing products relevant to the consumers. Right. Make it affordable. This is our philosophy and the direction. So a couple of more questions. One is while we are at this point of expanding into what is lined up on the block front. While the cooling segment is a major contributor for you, what is the optics seen for air purifiers and also commercial refrigeration cold storages so far? Air purifier is not a happy story. Some of the market size continues to be 250 crores. You know that there is a lot of noise for about 2-3 weeks. Post Diwali, some stubble burning and it will be all over the news. And once that is over everybody forgets about the purified air. So that's why we felt that we should go and integrate air purifiers with the air conditioner. That is the direction we are taking. Now commercial refrigeration, we are the leaders. You know, in terms of range, it starts with some bottle of the distance or a water cooler, a freezer or a bottle cooler or cold storage solution for any commodity, whether it is an ice cream or a fruit or vegetable or meat or everything that we have got. And we are investing heavily in that area and India will grow in that space as well. For your information, in quite a few markets, the commercial refrigeration market size will be higher than air conditioner. You take Europe or the United States. In India it is still in its infancy state. The blue says one growth story, next to air conditioning, it will come from commercial refrigeration. A lot of investments are going on in that area. Right. There's a lot of focus on sustainability, you know, social initiatives and of course, brands, leading brands like yours are playing a huge role in it. Give me a little bit of some insights into what all is happening in that regard at your brand. The audience with technical stuff but in a very simple line way, you know, this air conditioner as a product is highly regulated. It is regulated more than cigarettes, for example. And number one, the GST is 28 percent. Number one, it is still seen as a luxury. The second part is the energy labeling program. Every two years, the energy efficiency norms are increased. Now, India will be one of the countries insisting on very high energy efficiency norms. Blue star has been hired at the curve and we have been always ready. I told you that future ready products are being launched now. We are even aware that what will be the next energy label change after a couple of years and we have gone and invested there. The next part is connected with global warming and ozone depletion. So ozone depletion, the industry has met with and everyone has migrated to other refrigerants, but the problem is ozone friendly refrigerant will cause global warming. So therefore, everyone have moved to low GWT. The next phase is to move towards zero GWT. So blue star is ready. It is investing there. There is the e-based program and we are supposed to comply with that. And we are going ahead and ensuring that we are one of the top compliant companies in terms of e-based management and in terms of recycling as well. In case of B2B businesses, we do a lot of refurbishment and revamping of the existing system. So that the life of an equipment like a chiller is increased by at least three, four, five years depending on the condition. So people can in the western country in six, seven years they will replace. We as a responsible player ensure that the customer can use it for 10 to 12 years of time in a commercial area. Now the electric vehicles is the answer to the automobile. Yeah, breakthrough technology is not yet available in the world for a condition. We believe at some point of a time that will come. So within blue star, one team is working on that, what that could be. And you won't believe just this afternoon, our Chairman Emeritus mentioned that given the fact that India is a poor country, many people cannot afford to be investing in some research and development or creating affordable solutions. That is, it is not an air conditioner. It is not a fan somewhere in between everybody can, given the summer conditions and their affordability. So our innovation programs are here and confined to these, our takes in the account these requirements as well. Right. Thank you Mr. Thiyagarajan. Of course, have more questions, but then we're out of time. But really, so thank you very much for taking out time and joining us on this and sharing the facts and the insights of what it takes to build. Trust with your consumers and grow in challenging times. It's been great talking to you. Thank you so much for joining us. It was pleasure talking to you. I thank the media group once again for giving me this opportunity. All the best to you. Thank you. Thank you so much. Thank you for creating this conversation with Mr. V.K. Agarajan. Thank you so much for your valuable time.