Around two decades after Tata group firm Voltas was forced to exit the consumer durables vertical, due to stiff competition and tepid growth, it is coming back with a bang. The AC major has teamed with a foreign partner in bid to get second time lucky in the segment that is estimated to have reached Rs 1 lakh crore ($15.5 billion) last year.
Voltas and Arcelik, a part of Koc Holding, the largest industrial conglomerate in Turkey, have formed a 50:50 joint venture, Voltbek Home Appliances Pvt Ltd, and will reportedly invest Rs 1,000 crore in it over the next four-five years. The plans include launching more than 100 products over the next three months, and setting up a home appliances plant in Gujarat. Till the factory is operational, the products will reportedly be imported from Arcelik's global manufacturing units in Turkey and Thailand.
Voltbek's managing director and chief executive officer Pradeep Bakshi told Mint that the company aims to generate Rs 10,000 crore of revenue by 2025 by selling household appliances such as washing machines, refrigerators, microwaves and dishwashers under a new brand launched yesterday, Voltas Beko. In other words, the new entity hopes to corner around a 10% share of a market dominated by Korean consumer durable majors LG and Samsung.
"We have already bought a land parcel of 60 acre in Sanand, near Ahmedabad, where we are going to manufacture. We have already started civil works at factory and the products would be coming out by the second quarter of the next year," said Bakshi.
He added that Voltas Beko's range of home appliances would be "value for money" and would cater to all segments in the metros as well as tier II and III cities.
"We have been looking at India as a potential market for a long time. With its vast population and significant economic growth prospects, India offers huge potential to support our continued plans for global expansion. But, India is a difficult market. It's not possible to crack a market like India without a strong local partner. We waited until we decided to partner with Voltas," said Arcelik CEO Hakan Bulgurlu.
Initially, Arcelik would supply major components to the JV for manufacturing but it aims to increase the localisation ratio gradually. "Some components would be imported but, the idea is over time to localise as much as possible," Bulgurlu added.
According to Bakshi, Voltbek will also adopt a 360 degree approach to expand its dealership network, covering modern trade outlets, multi-brand outlets, e-commerce and more. "To begin with, in the next two years, we would add 10,000 additional outlets," he said, adding Voltas would also "add 500 more exclusive brand outlets in the next two years and taking it to over 1,000 in next three-four years".
Voltas currently boasts 100-odd exclusive brand outlets and around 70% of its dealers selling its range of cooling products also deal in other product categories. This is the network that Voltbek plans to leverage.
While the company intends to focus on the domestic market initially, it aims to also tap export opportunities in neighbouring Asian and African markets in the future.
The joint venture comes at a time the domestic consumer durables market is slated to grow at 10-12% per annum. Moreover, India is expected to rank fifth globally in this space by 2025, according to a joint report by Consumer Electronics and Appliances Manufacturers Association (CEAMA) and consultancy firm EY.
With PTI inputs