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Pradeep Bakshi, COO, Voltas Limited
Ten years back, Voltas was a Brand that Many had Started writing off. But then Started The Great Revival tale. Today, in The Business of selling Air-Conditioners, The Company is back as the #1. B&E’s Steven Philip Warner, discusses The Ups & Downs, The Past & Future, with The Man who has Lived through it all.
Issue Date - 12/05/2011
B&E: March 2011 saw Voltas become #1 in monthly volume sales of air conditioners on a nationwide basis, ahead of the #2 LG. Is it a sustainable lead?
Pradeep Bakshi (PB): Actually, in north Indian markets like Delhi, Punjab, Haryana etc, we have been no.1 for a long time. It’s just that we were inching towards the leadership position on a nationwide scale, and now that has happened. But the achievement did not come easy. During the past four to five years, we have worked hard to become the leader.

B&E: Ten years back, Voltas had its back to the wall. Then efforts for revival started. You have seen the changes. First, corporate restructuring. Then, branding. Did the changes come easy?
PB: Voltas has been in existence for five decades now. But it is only in the past ten years that our ACs have become a commodity. We realised the need to enter retail. That was one big change. There were challenges that we overcame in the past 10 years – in terms of team, channels, product and more. We changed every aspect of our business to make it stronger. For instance, we looked at and reworked every P of marketing. From changing the channels & the positioning, to changing the management – we did everything. We had the old management philosophy that believed that ACs are supposed to be sold only to institutions. No more. Today, we are available at 5000 touchpoints across the country. It was a Herculean task.

B&E: So the “sudden” fashion in which Voltas started becoming more visible as a brand, through advertisements, was all thanks to a change in management?
PB: Yes. There was an exodus of senior management team at Voltas in 2006-07. And with new people taking over, naturally newer ideas were brainstormed and accepted. The decision to get aggressive about advertising & R&D were ideas that were accepted. In 2010-11, we spent more than Rs.500 million in marketing, ads and R&D. This year, we planning somewhere around Rs.650 million.

B&E: Voltas group consists of 4 businesses. Three are institutional. The fourth and the only one which is B2C is your division – the Unitary Cooling Products unit – which caters to the room ACs. With rise in retail, do you see greater potential in your division to contribute more to the group?
PB: As of last year, our contribution to the group turnover was Rs.13.13 billion, which is about 30% of the total. If you look at the room AC business today, it is much less penetrated than the projects business. And going by how the economy is shaping up, there is a larger growth prospect in the room ACs business than the projects businesses. Today the room ACs business is a Rs.60 billion industry, with a volume size of 3.8 million. And it is likely to move to 4.5 million by FY2011-12. We clocked 0.75 million in volumes last fiscal and we are gunning for 1.2 million this fiscal. That is a growth of 50-60%!

B&E: So you are looking at growing your market share tremendously, because the industry growth forecasted for 2011-12 is just 18-20%...
PB: Definitely. While the industry may grow at somewhere up to even 30%, we are looking at a much bigger 50-60%. In short – 2.5 million units of ACs by 2015-16 and a 25% market share is what we are looking at, as the #1 player in this category even then.

B&E: But you have the Chinese & Japanese players getting stronger by the day too! So, easier said than done?
PB: If you look at the category, it is the least penetrated till date, amongst all consumer durables. The penetration is only 3%. And therefore there are many opportunities present in this category. There will be new entrants too, but it is not to be forgotten that we already have 20 multinational brands in the market today. And each of them are fighting hard. For instance, if you look at the Japanese brands like Panasonic, Toshiba & Daikin, unlike 10 years back, today they are competing even against the Chinese manufacturers who focus on the masses. So to say, there is a threat from each of them.


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