Case PresentationVOLTAS LTD.

From Turnaround to the Big bang

“Some like it Hot”

INTRODUCTION

• Voltas – a part of TATA Group• It was established in 1954 in Bombay as a JV between

M/s Volkart brothers & TATA Sons Ltd.• 1956- The company went public & Volkart brothers sold

their stake in the company.• 1961- Voltas marketed imported products.• 1963- First factory was established to manufacture ACs

& refrigeration equipment.• Later on many plants were set up to manufacture

compressors, condensers, chillers, ancillaries, refrigerators etc;..

Voltas Organizational StructureChairman Ishaat HussainManaging Director A SoniDirectors Nasser Munjee

N J JhaveriS D KulkarniRavi KantN D Khurody N N TataJimmy Bilimoria S.N. Menon

Managing Director A SoniPresident Sanjay JohriExecutive Vice Presidents M M Miyajiwala

A K JoshiVice President A J Gole

Corporate Management

Business Organization

Source: www.tata.com/voltasindia

Voltas is into

• Over the years Voltas tied up with USA-based Dunham Bush & Standard refrigeration company Japan based Hitachi Ltd.• To secure access to new technologies in air conditioning

& refrigeration market.• By 1990 Voltas diversified extensively in industries like

Food & beverages, forklift trucks, chemicals, pesticides, engineering services etc..,

• In 1996-97 the market shrunk by 9%(refrigerators) & it was a severe blow to Voltas.

• In 1996-97 company recorded its 1st ever loss of 170 million & also failed to pay dividend.

• The price of stock crashed from Rs.225-Rs.21.• So in 1997 MD Munshi was replaced by Nawshir

Khurody.• A huge restructuring process was followed which

involved all the businesses of Voltas, & its finances & human resources

• It was decided that the company would focus on its air-conditioning & engineering businesses.

• This exercise finally helped Voltas improve its profitability.

THE RESTRUCTURING

• One core management team started to analyze the viability of each business

• Incompetent business identify to be sold• Air conditioning and Engineering were two

profit making businesses• Idle assets were either leased or were sold

CONTINUECONTINUE

• In 2000 4 Refrigerator manufacturing units were sold to Electrolux

• Realized around 4.1 billion from sale of its businesses

• Voltas grouped its remaining business into 4 segments

• To reduce cost Voltas started to reduce its work force

• Encouraged new talent or ideas

Revenue of VoltasRevenue of Voltas

VOLTAS IN 2000VOLTAS IN 2000

NEW AVENUES FOR GROWTHNEW AVENUES FOR GROWTH

THE ELECTRO-MECHANICAL BUSINESSTHE ELECTRO-MECHANICAL BUSINESS

• Very successful working internationally also• Voltas India limited use to produce these

products• In 2001 VIL merged with Voltas• Opened offices in many other countries• Taking projects in India as well

Electromechanical business2005-06

Electromechanical business2005-06

The Unitary Cooling BusinessThe Unitary Cooling Business

Changed scenarioChanged scenario

• Between 2001- 2004 Industry growth 27%• Excise duty on Ac reduced from 110% to 60%• Improved Indian economic condition• Many new entries in retail AC market• By 2001 voltas came down to 7th position with

6.8% market share

Big Bang Strategy

What & Why Big Bang

• A Business Strategy• To reincarnate every facet of Air Conditioning

business (product, channel, systems, service, costs and brand)

• To improve margins• To stand against competition from newly

entered MNCs in AC market

What to do?

Lets Do It

New Product

Brand Building

Channel and Service

RISE TO THE TOP

• The Big Bang strategy was very successful. The company ranking in the retail AC market from No.7 to No.2 with in a year.

• Voltas retail AC 70% of its sales comes from the institutional market.

• Voltas launched a new range of AC for middle income households.

• Voltas launched separate marketing initiative for each state in India.

• Voltas built a new manufacturing plant in Uttaranchal at a investment of 1.2 million.

Market Share of Voltas Retail AC

Year 2001 2002 2003 2004 2005 2006

Market Share

6.8% 9.7% 11% 12% 16% 20%(E)

Rank 7 2 2 2 2 2

•The Industry grew by 22 percent, we grew 50 per cent.•A new factory as a capacity produce 3lakh AC per annum.•Voltas new thrust on marketing by launching a new aggressive ad campaign with a tag line- “India ka dil, India ka AC, Korea ka nahin.”

PBT of Voltas

THE OUTLOOK

• Rising incomes increased the demand for ACs in India. • Voltas planned to set up a research center for product

development.• Voltas also increased its exports of ACs.• The amendments in the APMC Act increased demand

for refrigerators.• Voltas’s elctromechanical business and the retail,

entertainment software sector showed strong growth.• The water treatment business was also expected to be

a growth factor.

Now where t stands