Turkish durables player Arçelik and Tata Group’s Voltas have started operations at their first production facility in India at Sanand in Gujarat.
The facility will be operated by Voltbek Home Appliances Pvt Ltd, the 50:50 joint venture between the two groups, and will gradually be scaled up to 2.5 million units of annual production by 2025.
The 60-acre facility is likely to focus on the production of washing machines and refrigerators — which drive most of the sales for Voltas Beko in India.
Gujarat is not a traditional destination for consumer durables companies. Most consumer durables companies have their production facilities located in places like Gurgaon, Chennai and Maharashtra. However, Tata — the parent of Voltas — already has an established production facility in Sanand.
“Voltbek’s Sanand factory is one of the first white goods appliances unit in the State of Gujarat that will create an OEM [supplier] base for home appliances in the region, along with local employment opportunities,” the companies said.
Voltas Beko has been very aggressive in its marketing, particularly in the refrigerator market. However, lack of an Indian manufacturing facility has kept the company back.
Without an Indian facility, Voltas Beko has been forced to confine itself to high-end, multi-door refrigerators.
“With this new facility the brand aims to increase its product portfolio and develop new innovative products specifically designed for Indian consumers,” the company said.
“Voltas Beko will produce Direct Cool Refrigerators which are around 80% of the refrigerator market by volume,” it said.
“With the Sanand factory now operational, Voltas Beko aims to broaden its consumer reach by providing affordable, accessible and high-quality consumer durables.”
Pradeep Bakshi, Managing Director & CEO of Voltas, said Voltas Beko is scheduled to sell close to half a million units by the end of this fiscal year.
“The brand already has a significant footprint in the washing machine and refrigerator categories, in addition to being a leading player in dishwashers. With this new manufacturing facility in Sanand, we are confident of becoming a leading player in the home appliances segment in India by 2025.”
The consumer durables market in India is slated to grow at 10–12 percent per annum.
While an outsized chunk of the durables market is with Korean companies Samsung and LG, the financial difficulties faced by Videocon Group — once the biggest Indian player — has opened up space for new entrants.
Nevertheless, the emergence of e-commerce as a significant distribution channel has thrown a challenge before most of the existing players, as they have been used to a dealer-oriented marketing strategy, instead of a purely consumer-oriented strategy.
During the last 10 years, the Indian Major Domestic Appliances market grew by nearly 9 percent, surpassing the overall 3 percent growth of the global white goods market.
For Arçelik, part of Koç Holding, the Indian expansion is part of its broader thrust in India the Asia Pacific region, with Thailand being another major area of investment.