Financial Daily from THE HINDU group of publications
Wednesday, Mar 15, 2006
Industry & Economy - Air-conditioners & Refrigerators
Voltas to exit fridges, focus on AC market
"By June this year, the first phase of our new plant at Pantnagar in Uttaranchal will start operations with production of refrigeration units."
New Delhi , March 14
Voltas Ltd has decided to discontinue making refrigerators for the home segment. The company was test-marketing 55-litre refrigerators for this segment under the Coldcell brand in 11 cities, but has decided to exit.
According to Mr K.J. Jawa, Senior-Vice President, Unitary Products Business Group, the decision was taken in view of the slow growth in the refrigerator category.
In addition, as per an agreement with Electrolux, the company can sell refrigerators under the Voltas brand only after September 2007.
"We have decided to focus on the air-conditioners segment in addition to the commercial AC and refrigeration segment. We may also enter newer categories such as water dispensers."
Mr Jawa said that Voltas has targeted capturing 20 per cent share in the 15 lakh units domestic AC market.
"To meet our target we have earmarked Rs 20 crore as advertising spend for both outdoors and TV commercials, and another Rs 6 crore on retail expansion. Our aim is to sell 3,00,000 units of air-conditioners this year compared to 2,00,000 units last year,'' Mr Jawa said while unveiling the company's product range for 2006, which includes split air-conditioners and window ACs from Rs 9,990 up to Rs 46,000.
Voltas is set to start production from its Uttaranchal plant by the middle of this year.
"By June this year, the first phase of our new plant at Pantnagar in Uttaranchal will start operations with production of refrigeration units," Mr Jawa said.
The company had invested around Rs 120 crore in the new plant and shifted its assets for manufacturing refrigerators from its Hyderabad unit.
Mr Jawa added that the company was looking to start the second phase of production from the Pantnagar plant by the end of this year or early next year.
Shifting the plant to an excise-free zone would help Voltas save 5-6 per cent per unit.
The unitary product division is looking to end this year with sales of Rs 600 crore, compared to Rs 400 crore last year.
It is aiming to double exports to 40,000 units in the next fiscal.
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