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VOLTAS CASE STUDYVOLTAS CASE STUDY

GENERAL MANAGEMENTGENERAL MANAGEMENT

By:-Vasista B VPrashanthNagendra Supriya T swamy

AGENDA OF THE PRESENTATIONAGENDA OF THE PRESENTATION

Background of the Voltas case Background of the Voltas case Strategy process at VoltasStrategy process at Voltas Mission statement (aim & goal)Mission statement (aim & goal) Objective Objective Environmental analysisEnvironmental analysis Strategy (generic, alternative)Strategy (generic, alternative) Swot analysisSwot analysis Conclusion Conclusion

Voltas was set up in the year 1954.Voltas was set up in the year 1954. In the year 1963 started manufacturing.In the year 1963 started manufacturing. In the year 1964 set up the supporting In the year 1964 set up the supporting

industry.industry. The range of products gradually widened.The range of products gradually widened. Voltas international limited was set up in the Voltas international limited was set up in the

year 1978.year 1978. Over a year voltas tied up with several global Over a year voltas tied up with several global

players.players. Until the 1990s voltas was a major player.Until the 1990s voltas was a major player.

Background of the case studyBackground of the case study

The company invested heavily in the business b/w The company invested heavily in the business b/w 1994&1997.1994&1997.

At the same time voltas had diversified into At the same time voltas had diversified into several unrelated business.several unrelated business.

Voltas acquired the loss-making Hyderabad Voltas acquired the loss-making Hyderabad ALLWYN LTD.ALLWYN LTD.

The demand fell down by 9% in 1996-97.The demand fell down by 9% in 1996-97. The debt doubled from 1.65 billion in 1994-95 to The debt doubled from 1.65 billion in 1994-95 to

3.3 billion 1996-97.3.3 billion 1996-97. The MD of voltas Viswanath H munshi replaced by The MD of voltas Viswanath H munshi replaced by

Nawshir.Nawshir.

Continued………..Continued………..

The restructuring. The restructuring.

Develop the core competency.Develop the core competency. Stabilize the cash flow position.Stabilize the cash flow position. Voluntary retire service.Voluntary retire service. Identifying avenues for growth.Identifying avenues for growth. The electro-mechanical businessThe electro-mechanical business The unitary cooling business.The unitary cooling business.

Continued…..Continued…..

The Big Bang strategyThe Big Bang strategy New products.New products. Brand building.Brand building. Channel & service.Channel & service.

Continued………Continued………

STRATEGY PROCESS AT STRATEGY PROCESS AT VOLTAS VOLTAS

VOLTAS PRODUCT LINEVOLTAS PRODUCT LINE Electro- Mechanical Projects and Services -Electro- Mechanical Projects and Services -

Air-conditioning and Refrigeration.Air-conditioning and Refrigeration. Electrical, Mechanical and HVAC Solution (International).Electrical, Mechanical and HVAC Solution (International). Water Management and Treatment.Water Management and Treatment.

Engineering Products & Services -Engineering Products & Services - Textile Machinery.Textile Machinery. Mining & Construction Equipments.Mining & Construction Equipments. Machine Tools.Machine Tools. Material Handling Solutions.Material Handling Solutions.

Unitary Cooling Products -Unitary Cooling Products - Cooling Appliances.Cooling Appliances. Commercial Refrigeration's.Commercial Refrigeration's.

Others -Others - Chemicals Trading.Chemicals Trading. Voltas – is leader in air conditioning business.Voltas – is leader in air conditioning business. Voltas – is largest projects exporter in Mechanical, Electrical and Public Health works.Voltas – is largest projects exporter in Mechanical, Electrical and Public Health works. Voltas - is No. 2 brand in air conditioners.Voltas - is No. 2 brand in air conditioners. Voltas – is most trusted name in mining and construction equipments.Voltas – is most trusted name in mining and construction equipments. Voltas – enjoys market leadership in textile machinery.Voltas – enjoys market leadership in textile machinery. Voltas – is a innovator and leading player in machine tools.Voltas – is a innovator and leading player in machine tools. Voltas – is leading force in forklift trucks.Voltas – is leading force in forklift trucks.

MISSION STATEMENTMISSION STATEMENTAIM :AIM : Historic Voltas mission to 'foster indigenous Historic Voltas mission to 'foster indigenous

manufacture' had one particularly momentous manufacture' had one particularly momentous outcome.outcome.

To foster indigenous manufacture of engineering To foster indigenous manufacture of engineering products and capital equipment, based on products and capital equipment, based on technologies acquired from overseas, often from technologies acquired from overseas, often from Volkart's existing principals.Volkart's existing principals.

To supply the full gamut of services, from To supply the full gamut of services, from marketing to commissioning, for such products.marketing to commissioning, for such products.

GOALGOAL : : To have a market share of 20% in 2006.To have a market share of 20% in 2006.

ENVIRONMENTAL ENVIRONMENTAL ANALYSISANALYSIS

(Where are we now??)(Where are we now??) From a loss of Rs. 119mn in 1998-99, Voltas recorded an From a loss of Rs. 119mn in 1998-99, Voltas recorded an

operating profit of Rs. 69mn in 2000.operating profit of Rs. 69mn in 2000. The company offered a dividend of 12% in 2000.The company offered a dividend of 12% in 2000. In electro-mechanical business, Voltas decided to In electro-mechanical business, Voltas decided to

strengthen its financial capabilities in order to further strengthen its financial capabilities in order to further expand it business. expand it business.

Voltas intended to grow through brand building and new Voltas intended to grow through brand building and new product launches.product launches.

Making a mark in the High end category Segment – electro Making a mark in the High end category Segment – electro mechanical projects, air conditioning and refrigeration. mechanical projects, air conditioning and refrigeration.

RAPIDLY INCREASING

ITS MARKET SHARE

Market Shares in the Indian Market Shares in the Indian Ac MarketAc Market

COMPANY LG VOLTAS SAMSUNG VIDEOCON HITACHI CARRIER OTHERS

FY02 15.2 10.6 6.8 5.3 8.2 9.8 44.1

FY03 23.5 12.1 6.5 6 10.7 11.8 29.4

FY04 28.5 10.9 9.2 7.5 8.2 9.2 2.5

FY05 32.7 13.5 9.7 9 7.2 6.6 21.3

3%

59%

25%

13%

Voltas Revenue Break-up Voltas Revenue Break-up in FY06in FY06

OBJECTIVEOBJECTIVE(Where do they want to (Where do they want to

be ???)be ???)To have a market share of 20% in 2006.Expansion of its Sales InfrastructureBecome a Mass product and still retain its leading edge technology

STRATEGY AT VOLTASSTRATEGY AT VOLTAS

(A) GENERIC STRATEGY:(A) GENERIC STRATEGY:Generic strategy includes Product diversificationGeneric strategy includes Product diversification

and focus of the companyand focus of the company

PRODUCT DIVERSIFICATIONPRODUCT DIVERSIFICATION Product Range is from contemporary to hi-techProduct Range is from contemporary to hi-tech Diversifying products so that each and every segment Diversifying products so that each and every segment

is coveredis covered

FOCUS OF THE COMPANYFOCUS OF THE COMPANY Provide contemporary and best-in-class products meeting customer needs and value Provide contemporary and best-in-class products meeting customer needs and value

expectationsexpectations

Build customer loyalty by strengthening after-market operations through service.Build customer loyalty by strengthening after-market operations through service.

Ensure cost reduction in all aspects of operations to achieve total cost leadership in Ensure cost reduction in all aspects of operations to achieve total cost leadership in

the market.the market.

Achieve market leadership through people by attracting, developing and retaining Achieve market leadership through people by attracting, developing and retaining

excellence in personnel.excellence in personnel.

Energise the organization through teamwork to ensure that various functional areas Energise the organization through teamwork to ensure that various functional areas

work together to deliver results in a quick and effective manner.work together to deliver results in a quick and effective manner.

Explore new avenues for revenue generation leveraging established manufacturing Explore new avenues for revenue generation leveraging established manufacturing

and distribution strengths.and distribution strengths.

Spending a good amount of its revenue on R&D.Spending a good amount of its revenue on R&D.

(B) ALTERNATIVE (B) ALTERNATIVE

STRATEGY STRATEGY

BIG BANG STRATEGYBIG BANG STRATEGY

INTRODUCTION OF NEW PRODUCT.INTRODUCTION OF NEW PRODUCT. BRAND BUILDING.BRAND BUILDING. ESTABLISHMENT OF A WIDESPREAD ESTABLISHMENT OF A WIDESPREAD

SERVICE NETWORK.SERVICE NETWORK.

MARKET PENETRATIONMARKET PENETRATION

Working towards reaching out all the cities.Working towards reaching out all the cities. Expanding its sales network.Expanding its sales network. Revamping sales infrastructure.Revamping sales infrastructure.

SWOT ANALYSISSWOT ANALYSIS

STRENGHTSSTRENGHTS

Design and manufacture of Design and manufacture of industrial equipment.industrial equipment.

Management and execution of Management and execution of air conditioning .air conditioning .

Public works projects.Public works projects. Sourcing, installation and Sourcing, installation and

servicing of technology-based servicing of technology-based systems. systems.

Voltas represents a number of Voltas represents a number of global technology leaders, global technology leaders, serving diverse industrial sectors serving diverse industrial sectors and applications.and applications.

WEAKNESSWEAKNESS

Not targeting the mass marketNot targeting the mass market

OPPORTUNITIESOPPORTUNITIES

The Indian Mass Market.The Indian Mass Market. The high end value driven The high end value driven

proposition helps increase the proposition helps increase the Market Share.Market Share.

VOLTAS is well known for it VOLTAS is well known for it product differentiationproduct differentiation

THREATSTHREATS

Indian Mass Market may Indian Mass Market may be captured by a rival be captured by a rival company, LG, Videocon, company, LG, Videocon, Samsung etc.Samsung etc.

Due to increased price of Due to increased price of inputs and continuing inputs and continuing price erosion there is price erosion there is downtrend in the downtrend in the consumer durables consumer durables market.market.

Conclusion Conclusion

Voltas Values Engineers

Voltas Engineers Value

THANK YOUTHANK YOU