Affrima Leads

EPACK Durable Pvt. Ltd, India’s second-largest contract manufacturer of room air-conditioners (RACs), is raising a $40-million round led by private equity fund Affirma Capital, two people in the know said, requesting anonymity.

The company is looking to invest the capital in brownfield and greenfield projects to leverage the production-linked incentive scheme for RACs, as it looks to increase capacity to 3.6 million units by next year, they added.

In the last round of funding in September 2021, it had raised $24 million from ICICI Ventures. At its facilities in Dehradun and Bhiwadi, EPACK manufactures RACs, components and small household appliances for leading Indian and foreign brands. The company has an installed capacity of more than 2.4 million RACs and one million small household appliances. It is looking at expanding capacity further and focussing on backward integration for components.

It plans to set up a new manufacturing unit in South India to serve southern and western markets, said one of the two people cited above. Apart from serving the domestic market, it also plans to increase exports, he added. The greenfield manufacturing facility is being set up in Sri City, Andhra Pradesh, and is expected to be commissioned by next year.

The company is also planning to increase capacity at its facility in Bhiwadi, which will be commissioned by the end of this financial year.

“RAC penetration in India is among the lowest in the world at 7-8% of households. Over the last two decades, it has been building manufacturing capability for RACs as well as small home appliances. It has built strong business relationships with all key brands. The fresh funding from Affirma Capital will help the company expand its manufacturing and R&D capabilities, thereby gaining market share over the next 4-5 years,” the second person said.

The company manufactures both window and split ACs. Its household appliances portfolio includes induction cooktops, mixer grinders and water dispensers. “As the penetration of ACs and home appliances increases, it is well positioned for significant growth,” he added. The company posted revenue of more than 1900 crore in FY22, and is aiming to double it to 11,700 crores this fiscal year, he added. Voltas contributes 35-40 % of its revenues in the RAC segment, he said.