Voltas posted its highest market share in air conditioners in June, weathering rough conditions. The big ask now is to replicate that success in its white goods segment, Voltas Beko, and become a brand for all seasons
Pradeep Bakshi, MD and CEO of Voltas, is banking on the historic grit of the brand.
Photo: Madhu Kapparath
“It was quite a turbulent phase for Voltas,” recalls Pradeep Bakshi, managing director and chief executive officer of Voltas, alluding to the period between 1993 and 2005. Bakshi, who joined the Tata-owned company in November 2001, recounts the horror story during the ‘second phase’ in the history of the 66-year-old firm. The company struggled, lost market share, and accumulated losses during 12 years starting 1993. In the early 2000s, it exited the business of refrigerators, washing machines and white goods. Though revenue increased from Rs811 crore in FY95 to Rs1,119 crore in five years, PAT (profit after tax) slipped from Rs22 crore to Rs5.5 crore during the same period. The heat was on.
The devastating part, though, was that Voltas was fast losing the plot in the core business of air conditioners (AC). From a market share of over 40 percent in the early 90s, it slipped to sixth or seventh in the pecking order in 2000. First dethroned by American brand Carrier in the early 90s, the Indian company was subsequently aggressively pushed down by South Korean rivals LG and Samsung. “Voltas lost its leadership position,” rues Bakshi. A bunch of deep-pocketed multinationals, he points out, was able to buy market share at Voltas’s expense.
Cut to April 2020. Voltas was entering the new fiscal with a massive tailwind. In spite of a muted consumer durable market and overall slowdown last year, the company managed to increase its revenues by 8 percent; in ACs, it was galloping at a staggering pace of 52 percent; in fact, in it, the company managed to sell over 2.5 lakh units in some months; overall, it was chasing a realistic target of touching the two-million mark. Then came the pandemic, and subsequent lockdown towards the end of March, which spoilt the party. “March, April and May contribute to almost 50 percent of our business,” says Bakshi. Summer, he lets on, got wiped out. In fact, 50 to 60 percent of the business for the AC industry comes between March and June.
But June and the months that followed brought a lot of cheer. Voltas posted its highest market share in ACs in June, at 26.9 percent; it ended the first quarter (March-June) of FY21 with a 26.2 percent share, which climbed a tad to 26.6 percent in the July-September period. “Strong performance of the air conditioner franchise in a challenging macro environment was the highlight of this quarter,” underlined Goldman Sachs in its research report early this month.