Voltas has put off the launch of its Beko brand of consumer durables to the second half of 2018 as it senses intense competition in the segment and wants to get its strategy right before bringing in its refrigerators, washing machines and dishwashers.
The Tata Group’s air-conditioning and engineering services company had signed a 50-50 joint venture with Turkey-based Ardutch, a subsidiary of Arcelik which makes Beko brand durables, and had planned to introduce the brand before the festival season.
Addressing analysts during the Q2 conference call, Chief Financial Officer Voltas Anil George said: “We have moved back the launch of products to the second half of next year. In the last couple of months we have formed joint teams for marketing and have a five-year strategic plan. We want the products to stand out in quality and features with a value proposition.’’
Voltas has also identified certain manufacturing locations for refrigerators and washing machines. It would initailly import the products from Arceliks’s units in Turkey and Malaysia and Indonesia.
According to sources, Voltas has already appointed a CEO for its new venture, picking the candidate from Godrej Appliances.
But entering the ₹35,000-crore consumer durables segment will not be easy for Voltas as it will face competition from more than 15 brands.
But the Voltas Beko is optimistic of garnering a 10 per cent share with a turnover of ₹3,500 crore.
Voltas had considered a joint venture in the consumer durables category in 2012 but after its engineering division suffered losses in West Asia, it had put its plans on hold. “Back then it had suffered losses of more than ₹1,000 crore in its engineering division and could not afford to enter the segment. There had always been a game plan to enter into a JV for consumer durables and now as it is in a leadership position in air-conditioners, it can afford to enter new segments,” said John Perinchery, analyst at Emkay Global Financial Services.
Indeed, the market leader in room air-conditioners has held on to its position with a 23 per cent share in multi-brand outlets. While it hopes to increase its share, it has yet to gather significant volumes in the inverter segment.
Said CFO George: “The inverter market will grow no doubt and currently it is at 20 per cent of the air conditioning category. We have 15 per cent of our sales coming from this category compared to 6.7 per cent last year. However the shift to the inverter category will be gradual and not overnight.”
Voltas’ revenues from unitary cooling products was higher at ₹408 crore in the second quarter compared to ₹354 crore in the corresponding previous quarter.
“The lack of clarity on GST transitional credit in June lead to a spurt in secondary sales. In Q2, we witnessed restocking... however secondary demand was affected due to the pre-buying in June and prolonged monsoon,” added George.