The JV targets market leadership in 10 years
28 May 2017 – Beko, part of Koç Holding A.S. (Koç Holding), Turkey’s largest industrials conglomerate, and Voltas Limited, part of the Tata Group, India’s largest conglomerate, have announced a deal that will see Beko and Voltas, India’s largest air conditioning brand, enter into a joint venture (JV) for consumer durables.
The proposed new company, to be incorporated in India, will be an equal partnership. The JV will be incorporated between Ardutch B.V. (49%), wholly owned subsidiary of Arçelik, owner of Beko Brand, Koç Holding (1%), Voltas (49 %), and Tata Investment Corporation Limited (1%). The partnership, once regulatory approval is received, will launch refrigerators, washing machines, microwaves and other white goods and major domestic appliances for the fast-growing consumer durables market in India.
The Joint Venture Company (JVC), with an equity capital of $100 million, will leverage the Beko brand and its expertise in the major domestic appliance sector across the globe, as well as Voltas’ strong brand presence and wide sales and distribution network in India.
The JV is key to Beko’s “Silk Road” business strategy, which seeks to create a continuous and strong presence in the corridor between Turkey and the Asia Pacific region. This move aims to tap into the Indian market which offers great potential with its approximately half billion middle-income consumers. The white goods market in India is expected to reach US$ 12 billion by 2027.
With the new greenfield investment, the JV looks to achieve a market leadership position in white goods. The new production facility is aimed to be operational by the end of 2018. The JVC will also sell major domestic appliances produced in various facilities of Beko around the world.
The JV demonstrates a joint vision of building a long-term sustainable durables business in India and Beko’s ongoing focus on the Asian continent as the key driver in its strategic growth plans.
Commenting on the partnership, Fatih Kemal Ebiçlioğlu, President of Consumer Durables Group of Koç Holding, said: “Given the accelerating shift of global economic power to Asia, this joint venture will be a critical step for Beko’s growth in the region. India stands out as an important opportunity window as it offers a great potential with its 1.3 billion population. In the last ten years alone, the Indian major domestic appliances market grew by nearly 9 percent, surpassing the overall 3 percent growth of global white goods market. With this joint venture, we make a strategic move to increase our global competitive advantage.”
Hakan Bulgurlu, CEO of Arçelik, said: “Our joint venture with Voltas and Tata Group demonstrates Beko’s commitment to India and showcases Beko’s “Silk Road” strategy, which seeks to capitalise on major growth opportunities in countries across the Asia Pacific.
“India’s rapidly expanding new middle class presents a major opportunity for our business. This young, urbanizing population includes many first-time buyers investing in white goods. The potential for growth in this market is incredibly exciting and we are proud to be partnering with the Tata Group to deliver this ambitious new partnership.
“By combining our global manufacturing expertise and innovation capabilities with Voltas’ expertise, we’re confident the company will deliver economic growth and act as a platform for our continued business success going forward.”
Ishaat Hussain, Tata Sons Director and Chairman of Voltas Ltd., said: “Consumer Durables is a logical extension for Voltas, and we are delighted to be forming this Joint Venture with Arçelik, part of the Koç Group. The strong technology platform, combined with the global manufacturing and sourcing capabilities of Arçelik, will help the JVC offer many unique and differentiated products to the Indian market. The Voltas-Beko partnership will also leverage the well-known brand and distribution strengths of Voltas, and we will work towards establishing the joint venture as a market leader for consumer durables in India.”
Sanjay Johri, Managing Director of Voltas Ltd., added: “Our long history, and our unique understanding of Indian customers combined with our brand and distribution strengths, has helped us become market leaders in room air-conditioners in India. Voltas’ core competence, and the manufacturing capabilities and wide product range of Beko will help us become a leading player in the consumer durables market in the country. The Indian consumer has always been at the forefront of all our plans, and the expansion in our product portfolio, through this foray, will as always, provide our customers products ‘made for India’, which specifically cater to their needs. We remain committed to our goals of sustainable profitable growth, and this Joint Venture will create enhanced value for our customers and shareholders.”
About Arçelik & Beko
Today Arçelik A.Ş. offers products and services around the world with its 30,000 employees, 18 production facilities in 7 countries (Turkey, Romania, Russia, China, South Africa, Thailand and Pakistan), its 34 sales and marketing offices in 32 countries and its 11 brands (Arçelik, Beko, Grundig, Blomberg, ElektraBregenz, Arctic, Leisure, Flavel, Defy, Altus and Dawlance) serving products and services in 145 countries. As the third largest home appliances company in Europe, the consolidated turnover of Arçelik A.Ş. was totalled at TRY 16.1 billion in 2016. Generating 60% of its income from global markets Arçelik A.Ş. owns 14 R&D centres, employing over 1,300 employees. Arçelik is listed in ISE (Borsa Istanbul) since 1986. Beko, the global brand of Arçelik A.Ş., has been the fastest growing home appliances brand of Europe since the millennium. Brand is the market leader in UK and Poland and the #1 freestanding white goods brand of Europe.
Voltas Limited is a premier engineering solutions provider and project specialist. Founded in India in 1954, Voltas Limited is part of the Tata Group, and offers engineering solutions for a wide spectrum of industries in areas such as heating, ventilation and air conditioning, refrigeration, electro-mechanical projects, textile machinery, mining and construction equipment, water management & treatment, cold chain solutions, building management systems, and indoor air quality. The Company is also the market leader in room air conditioners in India.
About Koç Holding
Koç Holding, the parent company of Arçelik A.Ş., is the leading investment holding company in Turkey and Koç Group is Turkey’s largest industrial and services group in terms of revenues, exports, taxes, number of employees and market capitalization on the Borsa İstanbul with over 95,000 people. Koç Holding has leading positions with strong competitive advantages in various sectors, such as energy, automotive, consumer durables and finance, which offer strong long-term growth potential. Following an average annual growth rate of 11% in consolidated profit in USD terms between 2006 and 2016, Koç Holding ranks among the world’s top 500 companies according to Fortune 500 with consolidated sales of around US$ 23.5 billion as of year-end 2016. Koç Group has been a driving force of the Turkish economy with total sales corresponding 6% of Turkey’s GDP, exports comprising 9% of Turkey’s total exports and Koç Holding and its listed subsidiaries making up 20% of Borsa Istanbul’s market capitalization.
About Tata Group
Founded by Jamsetji Tata in 1868, the Tata group is a global enterprise, headquartered in India, comprising over 100 independent operating companies. The group operates in more than 100 countries across six continents, with a mission ‘To improve the quality of life of the communities we serve globally, through long-term stakeholder value creation based on Leadership with Trust’. Tata Sons is the principal investment holding company and promoter of various Tata companies, including Voltas. Sixty-six percent of the equity share capital of Tata Sons is held by philanthropic trusts, which support education, health, livelihood generation and art and culture. In 2015-16, the revenue of Tata companies, taken together, was USD 103.51 billion. These companies collectively employ over 660,000 people.
Each Tata company or enterprise operates independently under the guidance and supervision of its own Board of Directors. There are 29 publicly-listed Tata enterprises with a combined market capitalization of about USD 116.41 billion (as on March 31, 2016). Going forward, Tata companies are building multinational businesses that seek to differentiate themselves through customer-centricity, innovation, entrepreneurship, trustworthiness and values-driven business operations, while balancing the interests of diverse stakeholders including shareholders, employees and society.