According to persons familiar with the subject, Tata Group is contemplating selling Voltas Ltd.’s home appliance division since the Indian conglomerate anticipates challenges in scaling up the company in a competitive market.
The sources, who asked not to be named because the information is confidential, said Tata Group’s management is discussing the sale and hasn’t decided whether to include its local joint venture with Arcelik AS in a transaction.
The discussions are in their early stages, and Tata Group may opt to hold the asset for a longer period, according to the sources. A Tata Group official refused to comment.
Voltas shares have climbed nearly 3% this year in Mumbai, giving the business a market value of roughly $3.3 billion.
According to its website, Voltas was founded in 1954 and makes air conditioners, water coolers, and commercial refrigeration equipment. It has operations in India, the Middle East, Southeast Asia, and Africa.
In India, the firm has a joint venture with Arcelik and has created a line of household appliances under the Voltas Beko brand.
In the most recent fiscal year, Voltas Beko recorded revenue of around 96.7 billion rupees ($1.2 billion). According to its quarterly results report, Voltas Beko had a market share of 3.3% for refrigerators and 5.4% for washing machines in India as of September 30.
Voltas led the domestic AC market with a 40% share from 1954 to 1992. The number of international players was low, making the game easy for this domestic brand. Voltas had to battle against players such as Blue Star, Fedders Loyd, and Acro. The sector was tiny and unorganized, yet it managed to capitalize on favorable profit margins. When the American air conditioning company Carrier entered the Indian market in 1993, it cast a shadow on the brand.
Voltas made concerted steps to reclaim its former standing. By working with Tata Strategic Management Group, the Voltas regeneration team attempted to comprehend shifting market dynamics, customer insights, company strategies, rivals, and future course of action. Voltas needed to transition from the engineering sector to the marketing sector.
Voltas developed a Big Bang approach that assisted them in revamping their product line, marketing strategies, brand promotions, expenses, and so on. Voltas’ major goal was to boost volume output and sales by lowering manufacturing and product costs. Voltas did not leave any stone unturned in order to expand AC sales in the industry.