Tata Group is exploring the potential sale of Voltas home appliance division, as it grapples with the challenges of competing in a fiercely competitive market. Discussions regarding this move are in their early stages, and the fate of Tata’s local joint venture with Arcelik AS is still uncertain. A final decision on the sale has not been reached.
Voltas Ltd., established in 1954, is renowned for its manufacturing of various products, including air conditioners, water coolers, and commercial refrigeration units. In addition to its core operations, Voltas partnered with Arcelik in India to introduce a range of home appliances under the brand Voltas Beko for the domestic market. In the last financial year, Voltas Beko reported substantial revenue of approximately INR 96.7 billion ($1.2 billion). As of September 30, the brand held a market share of 3.3% for refrigerators and 5.4% for washing machines in India.
The decision to explore the sale of Voltas Ltd.’s home appliance division arises from the formidable challenges that Tata Group anticipates in expanding its presence within the highly competitive market. While discussions regarding this potential sale are ongoing, Tata’s management has not concluded whether the local joint venture with Arcelik AS will be part of the transaction.
It is important to note that these considerations are in their infancy, and Tata Group may ultimately decide to retain the asset for an extended period. At present, Voltas shares have witnessed a decline of 13.90 points, trading at ₹814.05 at 2:16 pm, compared to an opening price of ₹827.90. A representative for Tata Group has chosen not to comment on the matter, maintaining a discreet stance as discussions progress.
Notably, Voltas achieved substantial growth in total income, with second-quarter total income reaching ₹2,364 crore, compared to ₹1,833 crore in the same period the previous year. The company’s board recently approved a proposal to raise up to ₹500 crore through the issuance of rated, listed, unsecured, redeemable non-convertible debentures (NCDs) on a private placement basis.
In this year’s second quarter, Voltas Ltd. had an EBITDA of ₹70.4 crore, a strong 30.2% increase from ₹101 crore during the same period last year. The EBITDA margin was 3.1% this quarter, down from 5.7% last year. On a positive note, the profit before tax (PBT) for this quarter was ₹85 crore, compared to ₹13 crore last year. As of September 30, 2023, the earnings per share (EPS) was ₹1.05, a significant improvement from the EPS of ₹0.22 last year.
The potential sale of Voltas Ltd.’s home appliance division is being closely monitored, with further developments awaited in the business world.
