Tatas want Voltas to be durable, plan to hive off its projects business
The Move is part of strategy to cut costs, boost efficiency by integrating operations that have synergies.
Voltas chairman Noel Tata and group chairman N Chandrasekaran have held early discussions around the business synergies in this regard, they told ETon condition of anonymity.
The move is part of group holding company Tata Sons’ strategy to consolidate and restructuring the group under 10 verticals by merging and integrating operations that have synergies to cut costs and improve efficiency.
Voltas has been placed under the consumer vertical after the restructuring and the leadership wants the company to focus on scaling up its presence in the durables sector where it’s struggling to keep up with competition, officials said.
The company is also a national and international provider of turnkey electromechanical solutions and services, having executed key projects in more than 35 countries as per its website.
Tata Sons did not comment while a Voltas spokesperson was noncommittal in his reply to queries.
“It should be noted that Voltas Projects has a significant MEP (mechanical, engineering and plumbing) presence in the Middle East. In fact, more than 50% of Voltas Projects’ revenue comes from outside India,” the Voltas spokesperson said. “Tata Projects is mainly focused on the Indian market across different segments, working as an EPC (engineering, procurement and construction).”
Tata Projects executes large and complex industrial and urban infrastructure projects. The company operates through four strategic business groups – industrial systems, core infrastructure, urban infrastructure, and services.
Group insiders said Noel Tata is looking to scale up Voltas businesses and has directed the top management to focus on aggressively growing the durable business with an eye on profitability.
Tata, who took over as Voltas chairman in September 2017 when his predecessor Ishaat Hussain retired, is now monitoring operations closely, they said.
The firm’s large air-conditioning and commercial refrigeration products have fallen behind competition in the last few years.
However, the company sees significant B2B growth opportunities in the commercial refrigeration vertical. Voltas has “put in place a new structure and are working on a vibrant and renewed product portfolio, to address this growth opportunity”, the company spokesperson said. While Voltas is the market leader in the room air-conditioner space, its joint venture with Turkey's Arcelik signed in 2017 to make and sell a wide range of household appliances such as washing machines, refrigerators, microwaves and dishwashers under Voltas Beko brand has been a slow starter.
Some top retailers told ET that the room AC strength of Voltas could not translate into similar presence for Voltas Beko products, and they do not stock any products under the JV brand.
The Voltas spokesperson, though, said Voltas Beko’s target of generating Rs 10,000 crore turnover along with a 10% market share by 2025 is achievable. “The JV formally launched a limited suite of its products in September 2018 and is currently sourcing these via imports and 3P manufacturers,” the person said.
“Production at our new facility in Gujarat will commence from end of 2019 and will aid cost-effective ready availability of larger volume direct cool refrigerators and washing machines. Meanwhile, we have started to place our JV products across MBOs and regional distributors.”
The company used to sell refrigerators, washing machines and airconditioners under Voltas brand till 1998 when it exited other segments to concentrate on air-conditioners, commercial freezers and projects as part of a restructuring.