'While competition is high, Voltas remains well protected'

Voltas, a leading brand for ACs, refrigerators and washing machines, expects margins to improve from Q1FY27. Managing director Mukundan Menon, in an interview with Sharleen D’Souza in Mumbai, talks about protecting its turf in a competitive market while increasing the company’s share. Edited excerpts:

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How will demand pan out given that all factors except weather are positive, and how will you manage pricing in light of the rupee-driven copper cost increases and goods and services tax (GST)-related savings. Will these offset each other enough to keep prices unchanged?

The big immediate positive is the 10 percentage point GST slab cut from 28 per cent to 18 percent, which effectively translates into a 7.8 per cent reduction in consumer prices. This benefit has already been fully passed on to customers. In parallel, a new energy-labelling regime takes effect from January 1, under which manufacturers cannot produce units with the old label after that date, though sales of old-label inventory are permitted for six months, until June. Typically, trade will sell mostly old-label products for the first two months, and then migrate brand-wise to new-label products. This would be in the third or fourth month, depending on stock levels. This new energy table will itself have a pricing impact and the most popular AC categories, three-star models, will likely see a sub-5 per cent price increase. Five-star models could face a significantly higher increase of around 10 percent, purely on account of the new efficiency norms. When set against the 7.8 per cent consumer price reduction from GST, the net impact will vary stock-keeping unit (SKU)-wise, but at an overall level, the GST cut is clearly supportive of demand.

On the cost side, there are still pressures from rupee depreciation and higher commodity prices, particularly copper. But costs going up are a reality. The likely timeline for the revised price list will be finalised and released sometime in January. Between now and April, there will be a price increase.

As the market leader in room air conditioners, how challenging is it to defend your market share amid increasing competitive pressure?