Voltas: From market leader to ugly duckling and back

From market leader to ugly duckling and back – the Voltas story illustrates how a company can reinvent itself by deploying the right strategic moves at the right time.

Voltas, founded by the Tata Group in 1954, was a pioneer in the Indian cooling appliances business; an unchallenged leader until the mid 1990s. Then came globalization, and with that a number of national and international players. Voltas suffered its first loss in 1996, and soon relegated to the back seat in the cooling business. That was when the company launched a massive restructuring exercise.

The main problem was its unwieldy workforce, 80% of which was unionized. In spite of stiff resistance from the workers’ unions, the company launched “zero budget” under which employees considered inevitable were identified – the others were encouraged to avail of VRS.

In order to boost employee morale, Voltas introduced performance-based incentives and hiked starting salaries. In a bold move, the company introduced on-line systems for performance appraisals and salary processing to ensure transparency across all levels. The human resource interventions were complemented by changes in marketing and financial strategies.

Results began to show within an year and the company regained much of its market share in the air-conditioner segment.

Today, Voltas is back on the leadership trajectory.