Industry to grow 10%; will maintain 22% mkt share: Voltas

Rating agency BofA-ML has downgraded its rating on the leading air conditioner brand Voltas to ‘underperformance’ from ‘buy’. The target prices, however, remains unchanged at Rs 292. The report says that increased competition could erode the company’s market share as well as margins. Speaking to CNBC-TV18, Pradeep Bakshi, President & COO- Unitary Products Business Group & Mining & Construction Equipment Division of Voltas says that the company will continue to maintain its 21-22 percent market share despite competition.Despite a slow summer sale, last few months were good for the industry, he says adding that the festive season aided the growth. Bonuses, discounts, cash benefits are all a ”part of the routine” and will not adversely impact sales, he says. Bakshi expects the industry to grow at 10-20 percent level in FY16. The company’s growth will depend upon consumer demand as well as industry growth, he adds. Below is the verbatim transcript of Pradeep Bakshi’s interview with Latha Venkatesh & Reema Tendulkar on CNBC-TV18.Reema: According to reports there has been increased competition. So, your peers are offering a higher warranty, little more discounts. Could you give us the sense of the competition in the industry right now and have we seen an increase in aggression from peers?A: What happens, this year when started summers were not so good but then later on it got it prolonged and last three-four months were pretty good for the industry in fact. Industry has witnessed reasonable good growth during the festival period and of course during the festivities generally people come up with lot of discounts and consumer promos for our consumer. That has what has given the benefit to the industry during this period. Lots of price discounts, lots of freebies were offered. Even we came up with the five years extended warranty on our air conditioners, besides this cash back offers so all this all in all was a reasonably good gain for the industry in this period. Industry would have grown between 10 and 15 to 20 percent depending upon different brands. So this was very good period for this sale.Reema: Will all this hurt the companies margin –this higher price discounts and freebies and secondly have you lost market share to any of your peers?A: Over all if you look at while discounts and consumer promos are offered and this is part of routine for every year actually we come up with these schemes and all. It is calculated and this is as per budgeted things only. When you are making more numbers it is setting off for the discounts part. So, all in all in our market share if you look at, as you were saying the market shares and profitability is eroding, no. Market share is not eroded, in fact if you look at the third party surveys and researches they are showing continuously Voltas has been a leader brand and our market share has been hovering between 21 and 22 percent continuously for last many years. So, all in all it was a good period for us. Latha: Can you tell us how you may end the year in terms of revenue growth?A: It will depend actually, as you know December-January they are little leaner months. If you look at our proposition the all weather air conditioning which we have been offering. We are telling our customers that AC is not to be used only for chilling their houses but it can also be used around the year during the winters you can switch on the heater part of the air condition. It will warm your houses. During the rainy season also, also in some part of the country there are second summers also so our all weather air conditioners are absolutely fitting. Going forward also now industry has been looking up developing and coming up with new technologies, innovations. More greener ACs are coming up. Also more and more consumers are getting aware about the energy efficient products. Customers have been looking forward to higher energy star rated product as well as these invertors ACs.I am delighted to share with the viewers here that Voltas has again, second time in last three years been awarded from National Energy Conservation Award we have been rewarded as the number one award for our air conditioner category. So, this is really good news so that also is stamping from the government side that it is the largest selling and the leading brand.