Voltas to move beyond A/Cs, re-enter areas it had quit

Sensing a change in the pattern of discretionary spending by consumers, Tata Group company Voltas is planning to re-enter some of other areas in the consumer durable space, reducing its dependence on its traditional air-conditioning and water cooler businesses.

Tata Strategic Management Group and Voltas are currently working on segments Voltas 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 in 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 come to us we may disclose further," Bakshi, who was in Kolkata to inaugurate Voltas brand shops, told reporters.

Continued sluggishness in consumer spending and a major shift in preferences 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-conditioning purchase now ranks much below a 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 growth patterns are pretty huge. Consumers don't even blink even while spending Rs30,000-40,000 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 - ACs, commercial refrigeration and water coolers - in unitary cooling production divisions apart from engineering project businesses and machinery.

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