Tata Group is considering selling the home appliance operation of Voltas Ltd. as the Indian conglomerate foresees difficulties in scaling up the business in a competitive market, according to people familiar with the matter.
Tata Group’s management is deliberating the possibility of the sale and hasn’t decided whether to include its local joint venture with Arcelik AS in a deal, the people said, asking not to be identified because the information is private.
Considerations are at an early stage and Tata Group may decide to keep the asset for longer, the people said. A representative for Tata Group declined to comment.
Shares in Voltas have risen about 3% in Mumbai this year, giving the company a market value of around $3.3 billion.
Founded in 1954, Voltas manufactures products including air conditioners and water coolers as well as commercial refrigeration units, according to its website. It has a presence across India, the Middle East, Southeast Asia and Africa.
The company also has a joint venture in India with Arcelik and launched a range of home appliances under the brand Voltas Beko in the domestic market.
Voltas Beko reported revenue of around 96.7 billion rupees ($1.2 billion) in the latest financial year. As of Sept. 30, Voltas Beko had a market share of 3.3% for refrigerators and 5.4% for washing machines in India, its quarterly earnings report shows.
How Tesla's India entry will disrupt desi tardy electric car market
After a long wait, finally it seems American electric vehicle (EV) maker Tesla will enter India next year. India's Prime Minister's Office has told relevant departments to fast-track Tesla's proposed investment in India by January 2024, ET has reported.
Tesla's entry will put a stamp of maturity on India's car market, the third biggest in the world after China and the US. Outside the US, Tesla has plants in Germany and China. As the Western countries struggle with slowing economies impacting demand and Tesla faces strong local competition from EV makers in China. selling its electric cars in India is an attractive prospect for the American company. Initially, it will sell fully built-up cars imported into India.
The talk of the government lowering India's steep import duties on cars for Tesla and others has created a flutter in the local car industry. Will lower import duties give Tesla an edge over Indian electric car makers which are still struggling to get on to the EV trend? Tesla CEO Elon Musk has been negotiating with the Indian government for long for lower import duties and the permission to sell fully built-up imported cars initially.
Earlier in June this year, Musk said Tesla could soon be setting up a manufacturing base in India, after meeting Prime Minister Narendra Modi in New York. Musk had said Tesla will be in India “as soon as humanly possible,” changing stance from about a year ago when the carmaker had said that the levies imposed by India on automobiles are the highest among large countries and that it can only consider setting up a factory locally if it succeeds with imported models.
India's present customs duty regime does not differentiate between electric cars and those that run on hydrocarbons, and imposes high duties to encourage local manufacturing.
Tesla first tried to enter India in 2021 by pushing officials to lower the 100% import tax for EVs. Last year, the talks between Tesla and the Indian government collapsed when officials conveyed the company would have to first commit to local manufacturing. Indian officials weren’t keen on providing duty cuts to Tesla unless commitments were made towards local investment. The company had sought a 40% import duty on fully assembled electric cars against the current rate of 60% applicable on prices below $40,000 and 100% on those retailed above that.
An outright cut in import duties, the government has apprehended, will result in the import of electric cars instead of companies setting up manufacturing facilities in India. This, in turn, will have an adverse impact on the kind of investments that lead to employment generation in the country.
India imposes 100% import duty on cars with cost, insurance, and freight value of more than $40,000, and 60% on cheaper vehicles. In 2021, Tesla had sought 40% import duty on fully assembled electric cars. Musk had argued that the duty structure for cars running on the electric powertrain should not be out of kilter with India’s climate-change objectives.
Reuters had reported in August that India was working on an EV policy that would cut import taxes for automakers that committed to some local manufacturing, citing sources with direct knowledge of the matter.
"A new category may be introduced in the import policy to ensure that clean energy driven vehicles are taxed lower," an official has told ET, while insisting that this incentive will not be "just for Tesla but for anyone committing to set up electric vehicle manufacturing units".
It is expected that in lieu of reduced import duty, Tesla will have to pledge to initiate local production, source components domestically, and provide bank guarantees to uphold its commitments.
Tata considering sale of Voltas home appliance business, sources say