Voltas Ltd.: From Turnaround to the 'Big Bang' |
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"With the restructuring well in place and a robust order book position, the company has confidence that a strong growth trajectory will be maintained as we go forward. The focus on streamlining processes, cost and financial management has also helped in the growth of profitability." 1 - M M Miyajiwala, Executive Vice President (Finance) and CFO, Voltas Ltd., in 2006. "Two factors were hindering the growth of the industry (air-conditioning): initial and recurring costs. No other company thought of breaking the price barrier; our idea has paid off." 2 - K. J. Jawa, Vice President (Operations), Voltas Ltd., in 2004. IntroductionIn March 2006, Voltas Ltd. (Voltas), a part of the Tata Group3 and a major player in the Indian air conditioner (AC) market,4 announced plans to invest about Rs. 200 million in brand-building and another Rs. 60 million in expanding its distribution network in the retail AC market for the year 2006-2007.
Anticipating high growth in the retail refrigerator market, Voltas invested heavily in the business between 1994 and 1997. However, in 1996-97, the market shrank by around 9%. Also, Voltas had diversified into several unrelated businesses like pesticides, furniture, granites,6 etc., in the period. By the mid 1990s, the management of these businesses proved to be difficult and some of them became a drag on the balance sheet. These factors led to Voltas registering its first loss in 1996-97.
Voltas Ltd.: From Turnaround to the 'Big Bang' - Next Page>>
1] "Voltas' FY 05-06 net sales up by 32 per cent; operating profit up by 124 per cent; net profit up by 40 per cent," www.tata.com/voltas, May 12, 2006.
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