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Voltas to diversify into consumer goods space

Co along with Tata Strategic Management Group studying on brand extensions in appliance, consumer durables and electronics categories

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Sensing the changing pattern of consumer spending in the discretionary space, Voltas, a Tata Group company, is planning to re-enter some of the brands in the consumer durable space, a move aimed at cutting its dependence on its traditional air-condition (ACs) and water cooler businesses in the white goods space.

Tata Strategic Management Group as well as Voltas are currently working on segments the Tata Group outfit can enter, and in some cases, re-enter since the 90s, said Pradeep Bakshi, president and chief operating officer, unitary air-conditioner division of the company.

"We are looking at brand extensions and the categories which are meaningful to us. Tata Strategic Management Group and also we, on our part, are carrying out the study on brand extensions as to find what makes sense to us in appliance, consumer durables and electronics. Once the results of the studies comes to us we may disclose further," Bakshi, who was in city to inaugurate Voltas brand shops, told reporters.

Continued sluggishness in consumer spending and a major shift in consumer preference within the consumer goods segment particularly about what they treat as discretionary and what they consider must-buys have probably sparked off this exercise to consider entering new businesses.

Air-condition purchase now ranks much below a rather costlier smart phone in the priority list of a household.

"Due to inflation and high interest rates - most of us have borrowed money for household needs - and after paying off higher EMIs people hardly have any money left to spend on luxuries and discretionary items. ACs now probably comes fifth or sixth in the priority of a household. But in, say, mobile phones, where in spite of anything happening to the world, growth patterns are pretty huge. Consumers don't even blink even while spending Rs 30,000-40,000 on a smart phone," Bakshi said, adding that despite such tough times, Voltas has been able to clock decent growth in its categories.

Voltas' possible diversification would bring back memories of a gamut of brands in the consumer durable space that the company once peddled from washing machines, refrigerators and also furniture through associations with Electrolux or Hyderabad Allwyn, a company which it had taken over.

"We exited refrigerator business in 1988-89. And even eight years back, the condition of the consumer durable division was so bad we were asked to vacate this space fully," Bakshi said.

Since then, Voltas has trimmed down to just three verticals like ACs, commercial refrigeration and water coolers in unitary cooling production divisions apart from engineering project businesses and machinery.

Voltas, meanwhile, is planning to up prices of ACs across the board by between 2-3% to pass on the withdrawal of the excise duty sops and also adverse foreign exchange movements impacting pricing of components, he said.

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