Hit by Covid-19 again, Voltas pins hopes on extended summer, festive season

New Delhi: With Covid-related restrictions imposed by states hitting sales in the ongoing quarter, Tata Group home appliances firm Voltas is pinning hopes on possible “right opportunities” going ahead like extended summer and brighter festival season to match the revenues posted in the previous two years.

In spite of disruptions caused by the coronavirus pandemic in the first of the last fiscal, the company recovered well on account of stellar performance by its cooling products business.

Its total income in the January-March quarter of the 2020-21 fiscal jumped 25 per cent to Rs 2,683 crore as compared with Rs 2,150 crore in the year-ago period In the financial year ended March 31, 2021, Voltas’ total income stood at Rs 7,745 crore, while it was Rs 7,889 crore in 2019-20.

Voltas MD and CEO Pradeep Bakshi told PTI that “in terms of matching up to our performance in last to last year (2019-2020), it is too early to say right now as it depends on several factors. If the summer season is longer, humid, harsher and continues till July, maybe we will be able to match those numbers.”

Covid-19 impact

The pressure built by the new wave of the pandemic has forced the company to play a catch-up when it comes to meeting expected sales numbers.

“Initially while budgeting, we had a lot of aspirations to grow more than double digits — but now due to the 1st quarter getting washed out, our endeavour will be to catch up with last year. However, it is difficult to say at the moment because you never know how things will turn out. I am confident that we will try our best to catch up in the next few quarters,” he said.

Earlier, the Tata Group company and leading air-conditioner manufacturer was expecting 15 to 20 per cent jump in sales this year, especially after a significant recovery in the market post lockdowns in the country last year.

Elaborating last year’s situation, he said, “Even if you look at the last two years of our business, 2019-20 and 2020-21 were almost neck to neck, and we did well in a challenging year gone by… Despite the second wave of the pandemic, our endeavour would be minimum to catch up with 2019-20 numbers. If we get the right opportunities in terms of extended summer, brighter festival season than previous year, we might just do better than last two years as well.”

Expansion plans

On being asked about the company’s expansion and investment plans in south India, Bakshi said, “While we had allocated some resources, including investments, for South, right now it is at a nascent stage because we are looking at acquiring a very big land parcel and facing some challenges in getting it.” Further, he said that it will take some time to come as there have been delays because of the lockdowns, and the machinery is non-operative during the year.

In the meanwhile, he said, the company is ramping up production at existing plants — two in Uttarakhand and two in Gujarat to meet the rising demand for ACs, refrigerators, washing machines, chest coolers, commercial refrigeration products, etc.

The Volats MD said the company has been exploring several options for the site for south plant in Tamil Nadu as it is looking at a fairly “big parcel”. “We have applied for 200 acres but are not getting a cumulative big parcel through the government or private agencies.” The south plant will mainly manufacture room air conditioners and it will also be used for manufacturing commercial refrigeration products. “As we grow and evolve, we will look at starting some other production there at a later stage,” he added.

Currently, Voltas has four factories spread across Pantnagar (one room AC plant and one commercial refrigeration plant), Waghodia (pne commercial AC plant) and Sanand (one home appliances plant for Voltas Beko JV) that are currently operational and consistently ramping up production to keep up with market demand.

‘Consumer sentiment hit’

According to Bakshi, at present the consumer sentiments have been hit and “there is nothing much to do in the first quarter”.

Comparing the business in April and May last year with this year so far, he said: “It’s same. The business is negligible. I do not think there is a change or difference between what happened last year and this year. It is equally bad.”  However, Bakshi said that as aspirations of the people are high, hence the “demand is not going to end”.

“I am sure in the second or third quarter, majorly in the festival season, September onwards, we would start gaining the lost grounds,” he said.

Besides, the commodity prices are also going up, Bakshi said adding prices of most commodities steel, copper and aluminium have gone up substantially. “Copper which used to be around USD 5,000 per tonne has gone up to $7,800 per tonne in the last one year only.” Moreover, sea freight has also gone up and all these things are creating pressure on procurement of raw material, he said.

On being asked as to whether Voltas would go for a price hike to offset the inflationary pressure, Bakshi said it would like to wait as demand has been low and it has already gone through two hikes totalling around 8 to 10% in the last 3-4 month.  “We have another pressure that the demand has been very low. Another hike would further derail the plans of the business. At the moment we are trying to hold up the prices,” he clarified.