Voltas Ltd.: From Turnaround to the 'Big Bang'

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Case Details:

Case Code : BSTR225
Case Length : 21 Pages
Period : 1996-2006
Organization : Voltas Ltd.
Pub Date : 2006
Teaching Note :Not Available
Countries : India
Themes: Diversification | Turnaround
Industry : Consumer Electronics

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction Contd...

In 2001, Voltas began focusing on large electromechanical projects in overseas markets. In the same year, Voltas also formulated the 'Big Bang' strategy aimed at becoming the market leader in the retail AC segment by 2004.

Voltas' strategy of concentrating on businesses where it had proven strengths helped it to improve profitability and register high growth levels. By 2006, the company was second in the retail AC market and its electromechanical division was the fastest growing and the highest revenue earning division in the company.

The company's other divisions like chemical trading and engineering products and services - textile machinery, mining and construction, machine tools, material handling (forklift trucks), were also doing well. Overall, the company was in a position to benefit from the huge opportunities that were coming its way and it expected future growth rates to remain high.

Background Note

Voltas was set up in 1954 in Bombay (later renamed Mumbai) as a joint venture between M/s Volkart Brothers7 and Tata Sons Ltd.8 This venture took over Volkart's import and engineering businesses. In 1956, the company went public and the Volkart Brothers sold their stake in the company.

Up until 1961, Voltas marketed imported products and acted as an indenting agent.9 In 1963, the company established its first factory at Chinchpokli in Bombay to manufacture ACs and refrigeration equipment. In 1964, Voltas set up a plant at Thane (near Bombay) to manufacture compressors, condensers, chillers, and ancillaries. The range of products was gradually widened to include other engineering, electrical, and agricultural equipment. In 1978, Voltas International Limited (VIL), a wholly-owned subsidiary of Voltas, was set up to handle international electro-mechanical and electrical power projects. In 1985, Voltas set up a compressor and a refrigerator manufacturing unit at Warora near Nagpur.

Excerpts >>

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7] Volkart Brothers was established in India in 1851. The firm was established by the two brothers - Salomon Volkart and Johann Georg Volkart. The firm traded in cotton, coffee, engineering products, etc.

8] Tata Sons Ltd is a successor to the first trading company founded by Jamsetji Tata (the founding father of the Tata business empire). The Tata Sons Ltd. Board is made up of the chairmen or CEOs of major operating Tata Group companies, and the elected chairman of the Board of Tata Sons Ltd. is recognized as the Group Chairman. The company is based in Mumbai.

9] Firms that act as indenting agents, usually, help other firms market import/export products. They undertake services like raw material/product sourcing, vendor assessment/enquiry, price negotiation, shipment inspection, etc.


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