Logistics Management at Voltas

5
Logistics Management at Voltas
Introduction
Case Context
One of the main strategic decisions a manufacturing enterprise has to take at the outset is to
locate its manufacturing activity in a suitable place. Logistical analysis is a major, though defi
nitely not the only important consideration in this analysis. In any case, the logistical conse
quences of the location decision are very significant and need to be thought through to ensure
proper market servicing and management of costs.
The location of the plant with respect to main raw material supply points and demand points
has primary consequences on transportation costs, and secondary, and sometimes very important
consequences with regard to inventory costs as well. For example, stocks held as a hedge against
uncertain supply from far off points and sometimes, pipeline inventories, are some of the
considerations.
The case of Voltas Limited provides comprehensive data to allow the logistics function to be
appropriately defined in the context of plant location.
The case presents the problem of capacity expansion in a general sense to, include new facili
ties and is one where logistics-related costs influence the decision significantly. In the case of
Voltas, the company is considering the choices of expanding capacity at its existing plant as well
as the option of opening a new plant. From a pure logistics perspective, the major factor when
considering a new plant is the fixed cost traded off against potential savings in transport and
other related operational costs.
As soon as more than one location is considered for any activity, like manufacturing, a number
of general questions arise:
1. What should be the products made at these locations?
2. What should be the volumes manufactured at the different locations?
3. What should be the markets served by these locations?
While the last decision is perhaps predominantly logistics-driven, a total cost approach will
show that logistics costs can significantly affect the first two decisions as well. Like all strategic
decisions, a number of considerations, some beyond the control of the organisation, such as
LOGISTICS MANAGEMENT AT VOLTAS 49
competition, external market growth and so on, have to be appropriately estimated for the pur
poses of a logistics decision.
Questions for Discussion
1. For the refrigerators produced by Voltas, estimate the total logistics cost as a function of
value added (total product cost-cost of raw materials).
2. What are the key logistics-related decisions for the refrigerator business group (RBG)?
3. What would be an approach to decide on a new location for the RBG expansion from 2,50,000
to 5,00,000 units? Based on this, select a few potential alternative locations. What are the
relative advantages and disadvantages for expansion at the existing site vis-a-vis choosing a
new site?
4. Towards this approach, what additional data would be required? With the available data,
provide an analysis to come up with a decision of a location.
Approach for Analysis
The total logistics cost consists of inventory cost at different locations (i.e. the sum of finished
goods in the pipeline and at godowns), transportation cost (primary and secondary), packaging,
insurance, godown operations (rent and salaries) and losses (handling and transit).
Based on a strategic assessment of market penetration and competitor presence, some promis
ing locations can be selected to set up a new plant. The consequences of doing so would have to
be evaluated. Both inbound logistics and outbound logistics would be affected by the location.
At the first cut, inbound logistics costs would need to be calculated from existing supply points
for raw materials, but for outbound costs, the market areas would first have to be allocated
appropriately to a manufacturing location before calculating the relevant costs.
The new plant could also be used as a competitive weapon to increase presence in certain
market areas (since there would be more direct access to local markets and better servicing
possibilities). As far as deciding on these markets goes, the existing market profile for the com
pany could be analysed to get a cumulative picture of the total demand concentration in various
regions.
Since potential locations could (theoretically) be anywhere among a large set of possible
locations, one would have to prune the set based on some practical considerations, such as
availability of transport and other infrastructure, suitability for corporate activity, competitor
presence, and so on. It is usual in such cases not to have complete data for all costs (especially
distances to markets and other locations, in general). Suitable approximations have to be made
for this purpose.
It is not clear initially as to what would be the major elements of cost. For example, in this
case, considering the value addition, the raw material procurement costs may turn out to be a
relatively minor consideration in deciding factory location. It is, therefore, a good idea to start
off by putting down all relevant costs and then deciding the important elements for further
analysis.
50 LOGISTICS AND SUPPLY CHAIN MANAGEMENT
Case Text
Logistics Management at Voltas (VOLTAS)
Background
Voltas Ltd was registered as a public limited company in 1954 through the joint efforts of Volkart
Brothers, a Swiss company, and Tata Sons. The former was operating in India for over a century
in the business of importing manufactured equipment, internal trade, shipping, forwarding and
clearing. The latter was among the largest Indian houses engaged in manufacturing a wide range
of industrial products.
Voltas took over from Volkart Brothers the import and engineering divisions, which included
the mechanical, electrical, textile, agricultural, refrigeration and airconditioning, pharmaceutical
and chemicals, and general departments. It also acquired from Volkart a small manufacturing
activity, which included assembling of airconditioners and water coolers.
Voltas received from Volkart a huge network of branches all over the country and an experi
enced marketing organisation of 2,000 employees, extensive international ties, and agencies of a
number of foreign companies.
Voltas started off as a marketing and distributing company. In 1954-55, 94 per cent of its total
sales consisted of trading in imported goods. Voltas, in these initial years, built its business
through an integrated marketing approach with heavy emphasis on after-sales service. For Voltas,
it meant maintenance of a large inventory of spare parts.
In the 1960s, the country's foreign exchange reserves were depleting, consequently govern
ment controls on foreign exchange threatened import business. Voltas' ability to carry adequate
stocks of spare parts for its after-sales service was severely affected. Canalisation of several main
items of import through government undertakings like State Trading Corporation and Mineral
and Metals Trading Corporation further restricted Voltas' business.
The company then realised the need for substituting imported goods by indigenous products
and creating its own production bases, and decided upon the following three-pronged strategy:
1. Promote joint ventures between Voltas' foreign principals and a third-party Indian manufac
turer.
2. Promote joint ventures between foreign principals and associate companies from the Tata
Group.
3. Set up own manufacturing facilities.
During the first decade, nearly 10 joint ventures were promoted, for which Voltas had the
distributorship rights. Thus, locally manufactured goods were replacing those which were previ
ously imported. The risk involved in this was, however, obvious. Once these companies gained a
foothold in their industries, they were likely to dispense with Voltas. There was the recognition
that without a manufacturing base, the long-term stability of the company would be affected.
Prepared by G. Raghuram. Assisted by G. Padmanabhan.
Teaching material of the Indian Institute of Management, Ahmedabad, is prepared as a basis for class discussion.
Cases are not designed to present illustrations of either correct or incorrect handling of administrative problems.
Copyright © Indian Institute of Management, Ahmedabad.

Over the years, Voltas has tried to improve its manufacturing base from a small inherited unit
manufacturing airconditioners and water coolers and in 1988, it had six manufacturing units
located in Maharashtra and West Bengal.
Organisation of Business
The operations of the company are organised into 12 independent business groups/ divisions,
each with its own facilities for market coverage and servicing of customers. The 12 groups/
divisions are:
1. Agro-industrial products and pumps division (AIP)
2. Airconditioning and refrigeration business group (ACRBG)
3. Appliances business group (ABG)
4. Chemicals division (CHEMICALS)
5. Electrical business group (EBG)
6. Engineering projects division (EPD)
7. Machine tool division (MTD)
8. Materials handling business group (MHBG)
9. Mining and construction equipment business group (M&CEBG)
10. Pharmaceuticals and consumer products division (PCP)
11. Refrigerator business group (RBG)
12. Textile machinery division (TMD)
Thus, Voltas is not only involved in industrial products but also in household consumer
products. It handles over 850 products manufactured by itself as well as 124 other manufacturers
from India and abroad.
Marketing
Voltas' main strength in marketing is its national distribution network, which is one of the most
comprehensive in India. The company markets not only the products of large .organisations, but
also of medium and small producers, who are thereby provided access to urban and rural areas
as also the benefits of technical assistance and quality control by Valtas.
The company operates through:
(a) Four zonal offices located in Mumbai, Bangalore, Calcutta and New Delhi.
(b) Nine branches located at Ahmedabad, Bangalore, Mumbai, Calcutta, Delhi, Jamshedpur,
Lucknow, Chennai and Secunderabad.
(c) Sixteen offices located at Asansol, Bhopal, Bhubaneswar, Chandigarh, Cochin,
Coimbatore, Cuttack, Dhanbad, Guwahati, Goa, Indore, Jaipur, Nagpur, Patna, Pune and
Vishakapatnam.
Over 2,000 stockists and 1,00,000 retail outlets cover the urban and rural markets. Voltas is
also represented in the USA by a branch office in New York, by Volkart Brothers Ltd, in Winterthur,
Switzerland, and by Tata Ltd in London, UK.

Manufacturing
The company has six manufacturing facilities as follows:
l. Thane plant: The products manufactured here are for the airconditioning and refrigeration
business group, appliances business group, materials handling business group and mining
and construction equipment business group.
2. Switch-gear plant: This plant is adjacent to the Thane plant. It produces sophisticated electri
cal products for the electrical business group.
3. Hermetic motor plant: This plant is adjacent to the switch-gear plant, producing hermetic and
semi-hermetic motors for the appliances business group and refrigerator business group.
4. Refrigerator plant: This plant is located at Warora in Chandrapur district, a backward area in
Maharashtra. The motors come from the hermetic motor plant whereas compressors are manu
factured here.
5. Transformer plant: This plant is located at Pune. These transformers are used by the electrical
business group.
6. Mining equipment design and manufacturing plant: This plant is located at Calcutta and makes
products for the mining and construction equipment business group.
Centralised Service Departments
Apart from the branches and manufacturing units, there are centralised service departments located
at the Mumbai corporate office. These departments include electronic data processing, finance,
industrial relations, audit, legal, manpower development, personnel, public relations, consumer
affairs, central purchase (including transport services) and central administration.
Exhibit 1 shows on a map, the manufacturing and branch office locations of Valtas Ltd.
Exhibit 2 gives the performance highlights of Valtas Ltd from 1984-85 until 1987-88 along with
the seven-month performance during September 1988 to March 1989. Exhibit 3 gives the balance
sheet and profit and loss account as on 31 March 1989. Exhibit 4 gives the division/business
group-wise value added statement for the distributed products.
Physical Distribution Management
Valtas is involved in distributing products manufactured by principals as well as its own prod
ucts. The break up of revenues between items distributed only, items manufactured and distrib
uted, and services rendered is given in Exhibit 4. To gain a better insight into the physical
distribution management, the case writer decided to look at one business group that manufac
tures its own item, namely, the refrigerator business group.
Refrigerator Business Group (RBG)
The organisation charts relevant for the business group set-up and the zonal set-up are given in
Exhibit 5. The RBG has been increasing its production base over the past few years through its
new plant at Warora in eastern Maharashtra. The growth of this group is best highlighted through
extracts from the 1984-85, 1986-87, 1987-88 and 1988-89 annual reports (Exhibit 6). Voltas makes
two models of refrigerators 165 litre and 300 litre (double door), in four colours-white, green,
blue and brown. The annual production and stock of refrigerators along with installed and
licensed capacity for the years 1983-84 to 1988-89 are given in Exhibit 7. Currently, they have an
installed capacity of 1,50,000 units per year and plan to increase it to 2,50,000 units per year by
the year 1 9 9 1 , at Warora.
Location
The factors that went into selecting Warora as the location for this pla nt were as follows:
(a) The Maharashtra government had granted permission to Voltas to close down its earlier
refrigerator manufacturing operations at Thane only if a new plant was set up in the state.
(b) All large industries were required to set up new plants (for most products) in backward
areas as part of the socio-economic policy of the government of Maharashtra. The two dis
tricts then listed as backward areas were Chandrapur and Bhandara districts. Both of them
are in eastern Maharashtra.
(c) Since reliable power supply was an important factor for putting up the refrigerator plant,
Chandrapur district was more attractive as a super thermal plant was being set up there.
Further, Voltas was given permission to have a twin hook-up with the distribution grid,
thereby ensuring high reliability in power supply.
(d) Warora was very close to the intersection of the two national highways running north-south
(NH No. 7) and east-west (NH No. 6). Of course, this advantage was also available in
Bhandara district.
The central government had decided that 5,00,000 units per year was the optimum size for a
firm involved in ·manufacturing refrigerators. Consequently, Voltas had obtained a license for
5,00,000 units. Voltas will thus have to decide on a location for its expansion programme, for
refrigerators, which they plan to do after three years. The broad options they have are:
(a) to expand the existing plant at Warora;
(b) to consider a new location.
The considerations for a new location would be:
(a) Potential market spread and associated transportation and distribution costs.
(b) Competitors' location, marketshare and plans.
(c) Capital cost, backward area benefits, etc.
(d) Access to national highways, availability of infrastructure.
(e) Raw material transport cost.
The current spread of the market for Voltas refrigerators is:
North Zone 35 per cent (UP, Rajasthan, Punjab, Haryana, HP, J&K and Delhi)
West Zone 35 per cent (Maharashtra, Gujarat, Madhya Pradesh and Goa)
South Zone 20 per cent (Kerala, Tamil Nadu, AP and Karnataka), and
East Zone 10 per cent. (Orissa, Bihar, West Bengal and the North-East).
Top management expects this zonal split up of sales to continue. Consequently, they are
thinking of a new location that may better cover the northern and eastern zones, using Warora
for serving the western and southern zones. .
Exhibit 8 gives the approximate figures of the sales, marketshare, capacities, and location of
all the firms in the refrigerator industry. Exhibit 9 is an article from Business World on the current
state of the industry. The top management expects the capital cost to be about the same, anywhere
in the country other than Warora and that most certainly a notified backward area would be
available in the near vicinity of any desired location. The capital cost for a manufacturing facility
with a capacity of 2,50,000 is estimated at Rs 25 crore at Warora and Rs 10 crore more at- any
other location. This is because a lot of infrastructural overheads need not be duplicated at Warora.
Since generally, national highways were preferred for truck movement, proximity to them was
important. Exhibit 10 gives the national highway network in India.
Raw materia l had to be transported to the plant ·from different locations. One refrigerator of
16 5 litre weighs 47 kg. Twenty kilograms of this is contributed by cold rolled steel, which is
currently imported through Mumbai. It has been identified that Hyderabad, Nagpur and Bokaro
are potential supply points for cold rolled steel. Of the other 27 kg, 8 kg of the material for the
compressor is obtained from Chennai. The remaining 19 kg of components are obtained as follows:
10 kg from Mumbai, 2 kg from Renukut in UP, 2 kg (glass) from Chennai (Calcutta is also a
potential location) and 5 kg from suppliers developed locally.
Distribution of Refrigerators
Godowns/S tocking Centres
The refrigerators are distributed through 13 godown points operated by Voltas and 18 stocking
centres operated by C&F (carrying and forwarding) agencies. Voltas godowns service 301 dealers
and the stocking centres service 351 dealers (Exhibit 1 1 ) . The concept of C&F agents came into
the distribution network since they were more cost effective. An agitation by the workers finally
led to an agreement with the management that the Voltas godowns would be retained and their
coverage, primarily in the urban areas would continue. C&F agents would be appointed only for
new areas, especially non-urban areas. The main points of the agreement are given in Exhibit 1 2.
Regarding location of godowns/stocking centres, central sales tax (4 per cent) is an important
factor, since out-of-state billings attract this tax on the refrigerator price. Exhibit 1 1 gives a state
wise location profile.
Road Transportation
All despatches are by road , and as far as possible on national highways, since the road condi
tion is better. The generally accepted routes from Warora for the primary distribution (from plant
to godown/stocking point) are shown in Exhibit 13 . Transport contracting is a fairly well organised
activity in Voltas. Exhibit 14 is a call for quotation for the annual freight rate contract for transport
of refrigerators from Warora to stations in the west zone. An example charge is Rs 3,850 per
truckload from Warora to Mumbai. This charge includes insurance and unloading.
Packaging
The refrigerators have a polythene cover and are then put in a cardboard box, tied by nylon
strips with metal clips. To facilitate handling, the base of the refrigerator has a wooden skid
frame. The total cost of packaging is Rs 182 (Rs 166 for the cardboard box) for the 300-litre
refrigerator and Rs 126 (Rs 1 1 2 for the cardboard box) for the 165-litre refrigerator. The loading
operations are mechanised at Warora (fork-lifts) while unloading operations are performed
manually.
Losses
It has been observed that for every 1,00,000 refrigerators, 3,000 are found defective due to transit
and handling. There are nearly 400 units in stock at any point of time awaiting repairs. The
different costs attributable to the losses are inspection cost (to identify defects)--Rs 10 per refrig
erator (100 per cent inspection), rework and discounted sale cost of Rs15 lakh.
Despatch
Exhibit 15 gives the date-wise despatches during the sample month of October 1988 for 165-litre
refrigerators. A truck carries 48 refrigerators (stacked 8 x 3, two high). The despatch schedule for
300-litre refrigerators for the same month is given in Exhibit 16. A truck carries 20 or 21 such
refrigerators (stacked 7 x 3). The godown/stocking point-wise offtake along with distances, truck
load rates and permitted transit time from Warora are given in Exhibit 17.
Taxes
Excise 15 per cent payable when the product leaves the plant.
Octroi : 5 t o 10 per cent of the price of the refrigerator (depending on the city)
Sales Tax W. Bengal 1 per cent of the price
Delhi: No tax
Other states: Varies from 10 to 1 6 . 6 per cent
Sales tax is paid on a monthly basis. The company collects the tax from the dealer as soon as
the invoice is filled.
The price in Mumbai inclusive of all taxes is Rs 6,948 for coloured 165-litre refrigerators,
Rs 6,827 for white 165-litre refrigerator and Rs 13,535 for 300-litre refrigerator.
The cost of raw materials is approximately Rs 3,000 for a 165-litre refrigerator and Rs 5,000
for a 300-litre refrigerator.

EXHIBIT 1
Manufacturing and Branch Office Locations
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EXHIBIT 2
Performance Highlights of Voltas Ltd
1988-89 1987-88 1986-87 1985-86 1984-85
1. Sales and Services (Incl. Rs 35,306 54,470 45,843 39,130 36,968
Consignment Sales)
2. Other Income Rs 121 291 151 127 150
3. Cost of Sales and Services Rs 29,587 45,520 38,225 32,958 31,441
4. Operating, Administration & Other Rs 4,977 7,759 6,684 5,881 5,556
Expenses
5. Staff Expenses (included in 3 & 4) Rs (2,701) (4,366) (3,827) (3,202) (3,170)
Number of Employees Nos 8,125 8,471 8,406 8,179 8,147
6. Profit before Taxation Rs 863 1,482 1,085 418 121
Percentage to Sales % 2.44 2.72 2.36 1.06 0.33
Percentage to Shareholders' Funds % 10.97 13.61 10.74 3.96 1. 1 5
7. Taxation Rs Nil 512 400 106 Nil
8. Profit after Taxation Rs 863 970 685 312 121
Percentage to Sales % 2.49 1.78 1.49 0.79 0.33
Percentage to Shareholders' Funds % 30.78° 22.00 18.42 9.14 4.06
9. Retained Profit Rs 683 689 480 199 23
10. Dividend Rs 180 281 205 11 3 98
Percentage % 24 22 16 10 10
11. Fixed Assets (at cost) % 10,500 8,151 6,892 5,842 5,014
12. Depreciation Rs 3,286 2,346 2,011 1,737 1,580
13. Investments Rs 449 526 557 572 512
14. Net Current Assets Rs 5,819 4,556 4,661 5,878 6,583
15. Total Assets Rs 13,482 10,887 10,099 10,555 10,529
16. Share Capital Rs 1,323 1,278 1,278 1,278 978
17. Reserves and Surplus Rs 3,484 3,131 2,441 2,137 2,002
18. Shareholders' Funds Rs 4,807 4,409 3,719 3,415 1,980
Equity per Share Rs @ 363 345 291 267 305
Earnings per Share Rs @ 112° 76 54 24 12
Number of Shareholders Nos. 67,257 72,341 74,719 75,903 45,237
Share Prices on Stock Exchange-High Rs @ 680 340 355 347 470
Low Rs @ 333 230 195 215 356
19. Borrowing Rs 8,675 6,478 6,380 7,141 7,549
Debt/Equity Ratio % 180 147 172 209 253
(Percentage to Shareholders' Funds)
Note: All amounts are in lakh of rupees except those marked @.
On annualised basis.
EXHIBIT 3
Abridged Balance Sheet as on 31 March 1989 (in Rs lakh)
As on 31
August 1988
Sources of Funds
1. Shareholders' Funds
(a) Capital Equity 1,278.22 1,278.22
Capital Suspense 44.33 Nil
1,322.55 1278.22
(b) Reserves and Surplus
Capital Reserves 168.18 153.18
Revenue Reserves 3,091.86 2,776.49
Surplus in Profit & Loss Account 224.34 201.25
3,484.38 3,130.92
Total Shareholders' Funds 4,806.93 4,409.24
2. Loan Funds
(a) Debentures and Bonds 1,345.99 1,405.99
(b) Public Deposits/Deposits from Shareholders 1,343.87 1,260.65
(c) Secured Loans 5,583.94 3,603.12
(d) Unsecured Loans 401.55 208.84
8,675.35 6,478.6
Total 13,482.28 10,887.74
Application of Funds
1. Fixed Assets
(a) Net Block (Cost or Book Value Less Depreciation) 6,482.11 4,678.38
(b) Capital Work-in-Progress 731.82 1,126.93
7,213.93 5,805.31
2. Investments (at Cost)
(a) Government Securities 2.71 3.31
(b) Investments in Subsidiary Companies
Quoted (Market Value: Rs 14.38 lakh)
(31.8.1988: Rs 14.38 lakh) 21.95 21.95
Unquoted 184.52 184.52
206.47 206.47
(c) Others
Quoted (Market Value Rs 558.61 lakh)
(31.8.1988: Rs 408.33 lakh) 71.75 135.75
Unquoted 168.52 18 1. 1 2
240.27 316.87
Total Investments 449.45 526.65
(Contd.)
As on 31
August 1988
3. (I) Current Assets, Loans and Advances
(a) Inventories 8,705.79 8 , 2 1 4 . 72
(b) Sundry Debtors 6,360.32 6,449.32
(c) Cash and Bank Balances 1,005.04 826.75
(d) Other Current Assets 0.68 0.61
(e) Loans and Advances
To Subsidiary Companies 383.74 335.3
To Others 3,330.87 2,187.13
3,714.61 2,522.43
Total Current Assets, Loans and Advances 19,786.44 18,013.83
Less
(a) Current Liabilities and Provisions
(b) Current Liabilities 12,994.89 12,113.93
(c) Provisions 972.65 1,344.12
13,967.54 13,458.05
Net Current Assets 5,818.9 4,555.78
Total 13,482.28 10,887.74
Abridged Profit and Loss Account for the Seven-month Period ended 31 March 1989 (in Rs lakh)
12 months
ended 31
August 1988
I. Income
(i) Sales/Services Rendered 26,404.85 43,779.91
(ii) Dividend 4.11 99.58
(iii) Other Income 117.09 1 9 1. 5
Total Income 26,526.05 44,070.99
II. Expenditure
Cost of Goods Consumed/Sold
() Opening Stock 13,724.31 11,587.72
(ii) Purchases 18,135.4 31.,392.46
Less: Closing Stock 14,711.84 13,724.31
17,147.87 29,255.87
Manufacturing/Jobs/Service Expenses 2,743.21 4,316.04
Salaries, Wages and Other Employee Benefits 2,696.83 4,359.8
Managerial Remuneration 4.59 5.89
(Contd.)
Interest (Net) 631.9 1,119.06
Depreciation 290.03 384.09
Auditors' Remuneration (Incl. Remuneration of
Branch and Cost Auditors) 8.02 10.7
Bad Debts and Provision for Doubtful Debts 124.97 140.66
Selling and Other Administration Expenses 2,015.39 2,996.48
25,662.81 42,588.59
III. Profit before Tax 863.24 1,482.4
IV. Provision for Taxation Nil 512
V. Profit after Taxation 863.24 970.4
VI. Balance Brought Forward from Previous Year 201.25 112.05
VII. Appropriations
(i) Transfers to Reserves (net) 660.31 600
(ii) Dividend 179.84 281.2
840.15 881.2
VITI. Balance Carried Forward 224.34 201.25

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EXHIBIT 5
Organisation Structure
Chairman
GM(O) Pub Affa. Sr VP VP CS VP C VP P
Purchase
GM (0) AC & R GM (0) GGM (0)
Textile Div.
GM (0) MT&MH EBG
Personnel
GM Red
CGM Thane
GM (0) GM (O)---ABG GM(O) RBG
DM-AIP OM-Chemicals Controller
of Purchase
VP (Personnel)
I I
GMs GM(O)
(Textile Machy)
NZ/SZf EZ/WZ
Manpower Staff Industrial
Development Admn Relations
Manager Manager
I I
Seryice Line
RSMs
I I
I I I
BM BM BM Service Sales Commercial
Business Group Set-up
GM(O)
Manufacturing Marketing Manager
Product Manager Divisional Manager
I I
Prodn Engg Materials All India Service Comm
Manager Manager Manager Sales Manager
GSM
Spare Parts
Manager Mkt.
Controller
EXHIBIT 6
Extracts from Annual Reports
1984-85
An important diversification for the company has been the manufacture of refrigerators at Warora, a backward
area in Chandrapur district of Maharashtra. The plant was commissioned in March 1985 in a record time of 18
months. The Voltas refrigerator was first launched in the east zone followed by extensions to south and west
zones. It incorporates several new features; its superiority over competitive products enables it to command a
premium in the market. Manufacturing facilities are now being established at Warora for the production of
refrigerator compressors in collaboration with Danfoss of Denmark-leaders in this field.
1986-87
Production and sales by the company's Refrigerator Business Group continued to expand satisfactorily during the
year 1986-87 contributing increasingly to the company's overall profits. Steps are being taken to raise the current
annual production capacity to one lakh units.
1987-88
The Refrigerator Business Group significantly increased its output, sales and profits; the company's products
continued to enjoy customer preference and a premium price. An export order from Iraq was executed during the
year which could signal the beginning of a growing international business in the company's refrigerators after the
current plans for increasing production capacity are implemented.
1988-89
The Refrigerator Business Group increased both production and sales during the period, notwithstanding an
unfortunate fire at the company's plant at Warora, which interrupted production during the critical last weeks of
the financial period. There were no casualties, and the commendable efforts of the management and staff helped
re-commence operations in record time. The product continues to enjoy high consumer preference and effective
steps have already been taken to augment production capacity.
EXHIBIT 7
Annual Production and Stock
Installed Licensed
Year Opening Manufactured Sales Closing Capacity Capacity
Stock Stock (per annum) (per annum)
1983-84 21 5 16 1,00,000
(0.38) (0.61) (0.12)
1984-85 16 2,886 1,592 1,303 1,00,000 1,00,000
( 0. 1 2 ) (2,879) ( 1 1 5. 4 7 ) (47.1)
1985-86 1,303 37,228 29,784 8737 1,00,000 1,00,000
(47.06) (37,218) (15,303.65) (328.35)
1986-87 8737 57,403 61,806 4,326 1,00,000 5,00,000
(328.35) (57,315) (3,276.61) ( 1 7 7. 8 5 )
1987-88 4,326 85,733 85,010 5,034 1,00,000 5,00,000
(177.85) (85,718) (4,713.04) (234.74)
1988-89 5,049 NA 52,239 NA 1,20,000 5,00,000
(234.79) (3021.41)
"These figures indicate actual addition to stock and sales.
Other figures in ( ) represent value in Rs lakh.

EXHIBIT 8
Manufacturer-wise and Product-wise Market Share
Year Organisation Small Medium Large Total
Qty Market Qty Market Qty Market Qty Market
Share (%) Share(%) Share (%) Share(%)
1980-81 Industry 5,107 2,08,242 45,724 2,59,073
Allwyn 1,970 38.57 24,172 1 1. 6 1 4,478 9.79 30,620 1 1. 8 2
K.O.I 3,137 61.43 83,988 40.33 19,561 42.78 1,06,680 41.18
Godrej 79,382 3 8. 1 2 21,685 47.42 1,01,067 39.01
Fedders 19,560 9.39 19,560 7.55
Voltas 1,140 0.55 1,140 0.44
1981-82 Industry 3,005 2,95,596 51,899 3,51,342
Allwyn 1,433 37.66 38,086 12.88 2,974 5.73 42,493 1 2. 0 9
K.O.I 2,372 62.44 1,46,058 49.41 27,622 53.22 1,76,094 50.13
Godrej 95,008 3 1. 1 4 21,266 40.97 1,16,283 3 3 . 10
Fedders 16,444 5.57 37 0.08 16,472 4.60
1982-83 Industry 2,499 3,63,898 38,441 4,04,838
Allwyn 9 0.36 41,669 11.45 2,179 5.67 43,857 10.83
K.O.I. 2,490 99.64 1,68,561 46.32 21,718 56.50 1,92,769 47.62
Godrej 1,38,171 37.96 14,318 37.25 1,52,489 37.67
Fedders 15,497 4.25 226 0.58 15,723 3.88
1983-84 Industry 893 4,74,686 62,065 5,26,675
Allwyn 1 0.10 49,209 10.37 3,806 6.13 53,016 9.61
K.O.I. 892 99.90 2,43,042 52.56 32,496 53.16 2,76,426 51.88
Godrej 1,52,301 32.97 24,611 39.80 1,76,912 34.67
Fedders 19,795 4.10 526 0.90 20,321 3.83
(Contd.)
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EXHIBIT 9
Corporate Combat a Cool Market
A luxury item till a few years ago, the refrigerator has now become a necessity. This transformation has taken
place in the last five years and sales of refrigerators have doubled from 5 lakh units in 1985 to 10.2 lakh units
in 1989. During this period, competition virtually turned this market into a hotbed for cool products.
Zone-wise Split of Refrigerators
Zone Percentage
North 34
West 33
South 23
East 10
Initially, refrigerator manufacturers were colour blind and produced only white refrigerators. However, in 1985,
Voltas Ltd repainted the scene when it re-entered the market with coloured refrigerators. Valtas had been in
hibernation between 1981 and 1985 following the government's refusal to allow it to enhance capacity at its
Thane (Mumbai) plant from 10,000 units per annum. Voltas was, thus, forced to move out of Thane to Warora
near Nagpur, which took four years.
Voltas' relaunch in 1985 heralded a number of changes. At that time, Kelvinator (the market leader, with four
brands) and Godrej were in the middle of a price war. Valtas went for the premium slot, pricing its product
Rs 1,000 above the rest of the pack. Its product matched that image and price and soon Voltas picked up the
threads it had left behind in 1 9 8 1.
If it can be said that competition benefits consumers most, the truth of it is certainly evident in the refrigerator
market in India. In the last five years, basic product features have undergone major changes: (1 ) the body has
metamorphosed from metal to plastics; (2) polyurethane foam insulation has become the norm; (3) painting is
done by powder coating as compared to the old-fashioned spray-drying; (4) voltage stabilisers are out and power
efficient compressors are in; and, (5) flexible rack arrangements have been introduced.
The entire industry has kept pace with these changes. In 19 88, Godrej came up with a new model incorporating
these ch a nges . In 198 9, Allwyn also matched these features. Now has been reached a situation where all
refrigerators in the market are very similar.
Market leader Kelvinator sells under four brand names- Kelvinator, Leonard, Gem and Tropicana. The industry
hence clubs these four together when it talks of Kelvinator. The single largest single brand is Godrej (see chart),
with Voltas, Allwyn and Zenith accounting for the balance.
Current Market Share
Company Per cent
Kelvinator
Leonard
Gem
Tropicana 39
Godrej 35
Voltas 12
Allwyn 10
Zenith 4
Kelvinator is very s tr on g in Kerala, the north and the east. Traditionally, it has been the lo west priced brand in
the market (not now) and with a good product, it was able to generate volumes. This is due to the fact that
while buying refrigerators, nearly 65 per cent of buyers consider the opinions or views of friends and relatives. If
Kelvinator maintains product quality, it can ensure that current consumers will generate new buyers. The company
will, however, have to spruce up its advertising if it wants to retain leadership.

Important Criteria for Buyers
Criteria Percentage
Friends' and others' opinion 65
Durability of product,
function of company image 15
Price 10
Dealer influence/push 10
Godrej, for some time, has pushed Kelvinator on the price front in order to gain volumes. This has not really
helped the company. It is now refocussing strategies on establishing brand values through advertising. The
advertising is two-pronged: in the print medium, Godrej is pushing attributes like ultraspace, a spectrum of
colours, megaforce (power saving) and Cool Guard. On TV, Godrej ads have been running for the past three
months, a really warm commercial. Competitors feel that the TV ad hasn't done much for Godrej but one might
have to wait another six months or more before evaluating the effectiveness.
Refrigerator Sales
Years Lakhs
1989 1 0. 2
1988 8.0
1987 6.5
1986 5.8
1985 5.0
Industry watchers feel that the two most crucial factors for continued growth in this market will be: (1) the
continuation of the instalment purchase plans, and (2) growth in Class 1 towns and below. A number of banks,
financial institutions and big dealers offer instalment plans to buy refrigerators. If the terms can be made more
attractive, it will tremendously help the industry. The market for refrigerators is fairly saturated in the metros.
So, the growth will have to come from towns in classes 1, 2, 3 and 4.
In ·the metros, a small replacement market is emerging and a few companies are rearranging their plans to tap
this segment. The only worry they have is company image. They would prefer to see dealers offering the
replacement service so that it protects the company image.
Tapping smaller markets, on the contrary, means an efficient dealer network. Almost all companies have good
networks and offer virtually the same and remuneration to dealers. Godrej's discounts, as a percentage of price,
are higher, but the dealer is not reimbursed spares on warranty cases. If this is accounted for, all dealers would
roughly end up with a margin of 5-6 per cent.
Worldwide, refrigerators are sold on a one-year warranty. In India, some companies offer a 10-year warranty
(seven years is the average). Whether this works or not has yet to be proved. It worked for Kelvinator in the price
war against Godrej. At the same price, Kelvinator offered a seven-year warranty against Godrej's five years and
picked volumes. But now, everybody is following it because it is an accepted practice.
To expand the market, refrigerator marketers are talking of 'frost-free' technology and tapping institutional
segments as possible priorities. 'Frost-free' technology would need blowers and complicated piping, so the price
is bound to move up from Rs 6,000 to Rs 8,000 per refrigerator on an average. The Indian housewife, by and
large, keeps only milk, butter, fruit, food and vegetables in her refrigerator. The number of households who store
meat and poultry products in the deep freeze is low. So, there might not be a big market for 'frost-free' fridges
at a Rs 2,000 mark-up.
Refrigerator Size Share
Size Percentage
65 litres and 90 litres 3
165 litres 88
300 litres and above 9
In the institutional segments, refrigerators compete with televisions in the basket of durables. In 1985-86, a
number of institutions such as cooperatives, employee welfare stores, etc., bought TVs at a discount and in
instalments. The repayment period (normally three years for a TV) is nearly over. Hence, refrigerator marketers
feel that this market could have potential as refrigerators follow television in the consumer's priority list. This
principle, if true, will apply right down the population strata. So, refrigerator manufacturers will have to pull off
something from the deep freeze if they do not want to remain as the poor cousins of television.
D. Shivakumar.
The author is a Chennai-based marketing executive.
Source: Business World.

EXHIBIT 10
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EXHIBIT 11
Godowns and Stocking Centres of Refrigerator Business Group
State Godowns No. of Dealers Stocking Centre No. of Dealers
Delhi New Delhi 38
Rajas than Jaipur 3 Jaipur 18
Uttar Pradesh Lucknow 3 Shuklaganj (Kanpur) 26
Ghaziabad 28
Punjab/Chandigarh Chandigarh 21
Haryana Kundli 16
North Zone 44 109
Tamil Nadu Chennai Chennai 29
Salem 22
Andhra Pradesh Secunderabad Secunderabad 26
Vijayawada 21
Karnataka Bangalore Bangalore 45
Kerala Cochin 24 Trichur 18
South Zone 161
West Bengal Calcutta 44 Asansol 9
Siliguri 4
Orissa Bhubaneswar /Cuttack 11
Assam Guwahati 31
Bihar Jamshedpur /Patna 33
East Zone 119 13
Maharashtra Mumbai 83 Vashi 21
Pune 16
Gate 10
Gujarat Ahmedabad 31
Goa Goa 2
Madhya Pradesh Indore 19
West Zone 114 68
Grand Total 301 351
J
EXHIBIT 12
Position of Management and the Federation on C&F Agency at the
Conclusion of the Meeting Held from 20-24 November, 1984.
Federation Management
(a) No. C&F agents would operate at the locations Management to revert on all the points and discussion
and surrounding districts where Valtas office and to continue.
godown exist. Delivery of all goods in this area
should be done by Valtas direct.
(b) For operations beyond the surrounding districts
C&F agency can be employed for the lines to be
mutually agreed upon by the Federation and the
Company from time to time. However, their dis
tribution centre should be located outside the area
mentioned in (a) above.
(c) Products manufactured by the company and also
those which are handled by the company's em
ployees shall continue to be handled by them only.
(d) Employees in the PCP Division will continue to
work in that Division and be given full work.
(e) Existing Valtas godowns should be fully utilised
for direct distribution by Voltas.
The above can be agreed to, provided that
(i) The management gives categorical commitment This rider is not acceptable.
that the total employees' strength provided by the

Not acceptable. The variation in employment (increase
Fedn/its affiliated Unions as existed at the time
or decrease) in the existing locations is mainly on ac
of 1973 EDP settlement is maintained at every
count of shrinkage in trading activities including lines
location and that the strength would be increased
going out (Construction Equipment, Rasna, Amul, etc.)
in same proportion to the growth of the company
and closure of operations (Refrigerator, Capacitor, etc).
to be determined by the parties every year.
EDP agreement provides removal of adverse effects
on introduction of EDP and therefore the proper re
course.
EXHIBIT 13
Routes from Warora
New Delhi
0 Godown
e Stocking Centre
0 Stocking Centre & Godown

EXHIBIT 14
Central Purchase Department
4th November 1988
Dear Sirs,
Annual freight rate contract for primary movement of refrigerators from our refrigerator plant at Warora,
Dist. Chandrapur, Madhya Pradesh and Goa
We intend to enter into an annual freight rate contract for transport of refrigerators from our refrigerator plant at
Warora to stations in Maharashtra, Gujarat, Madhya Pradesh and Goa.
Please submit your assignment in duplicate for understanding the transport work, subject to the following terms
and conditions:
Product
Our refrigerators come in two models-165 litre model and 300 litre model.
The dimension of these models are as under:
Model Dimensions Weight
165 L 550 mm width x 445 mm depth x 1055 mm height 52 kg Net
300 L 595 mm width x 592 mm depth x 1530 mm height 68 kg Net
Suitable packing is provided by us.
Location of the Plant
The refrigerator plant is located at village Hajara, Tehsil Warora, District Chandrapur 442907 (Telephone
No. 141)
Nagpur Office: Voltas Limited, Refrigerator Business Group, 42, Vidhyavihar, Rana Pratap Nagar, Nagpur
440022 (Telephones. 43564 and 24202).
Type of Vehicles required
As far as possible, full truck loads shall be booked. The carrier shall-provide LP (Long Platform) with no Hump
or tool for projection inside the lorry. The length of the vehicle should not be less than 18 feet so as to
accommodate not less than 48 nos. of model 165 L or 21 nos. of Model 300 L o r a suitable combination of the
two models.
Vehicles less than 18 ft in length will be rejected without any detention charges.
Before placement, all vehicles should be checked as regards suitability of their length, width, condition of the
platform and other features.
In the case of vehicles with a length more than 18 ft, VL may load more than 48 nos. of 165 L model and the
carrier shall not claim additional freight.
Defective vehicles, if received, shall be returned by the plant.
Stations
Annexure 'A' to this enquiry indicates a list of stations with a maximum transit time allowed for each of the
stations. Please quote your freight rates/charges against each of these stations.
Insurance
Carriage of refrigerators (in the event of our concluding a contract with you) shall be governed by our
self-insurance scheme and sharing of losses with the carrier. The scheme is briefly explained vide Clause 7.1
(Contd.)
EXHIBIT 14 (Contd.)
of the standard terms and conditions. Please confirm your acceptance to share transit losses under your
scheme.
Loading and Unloading
Loading shall be done by our refrigerator plant at Warora.
Unloading, wherever required, will be done by the carrier. Please quote lumpsum charges for unloading at the
receiving end.
Indenting of Vehicles
Voltas Refrigerator Division at Nagpur will give you a notice of 48 hours for placement of LP trucks at our
refrigerator plant, Warora. If you fail to provide vehicles at appointed time and date, we reserve the right to hire
vehicles in the open market from any other carrier at the prevalent rate and recover the difference in freight, if
any, from you.
Freight Rates and Payment
Freight rates can be indicated by you in Annexure 'A' will be net and no other charges such as bilty charges,
hamali, incidentals, etc. shall be payable.
Payment of freight shall be made to you by the receiving VL centre concerned in accordance with our standard
terms.
Two-point Collection and Two-point Delivery
Two-point Collection and Two-point Delivery at the collection point or at the delivery point or at both the places
will be made without any additional charges in the case of full truck loads.
In case we give you part load material to two nearby destinations, falling on the same route, making a full truck
load, you will deliver the first consignment at the first destination and carry the balance to the ultimate destina
tion. For such transactions, we will pay you full truckload charges to the ultimate destination. You will not carry
any other material in such transactions other than our own.
Standard Terms and Conditions
In the event of our concluding a freight rate agreement for transport of refrigerators at Warora, carriage of
refrigerators will be governed by our standard terms and conditions copy enclosed. Please confirm your acceptance
or non-acceptance of all/some of our conditions.
Quotation
Your quotation in duplicate, valid for 3 months, should reach us before 3.00 p.m. on 28th November 1988. Your
quotation, in sealed cover, should be marked for the attention of the undersigned.
Yours faithfully,
EXHIBIT 15
Date-wise Despatch of 165-litre Refrigerators
Date No. of Destination Items for Each
Trucks Destination
1-10-88 6 Vashi, Chinchpokli, Ahmedabad, Pune, Delhi and Salem 48 Green
3-10-88 6 Chinchpokli, Vashi, Pune, Ghaziabad, Ahmedabad and Bangalore 48 Green
4-10-88 6 Calcutta, Asansol, Ahmedabad, Shuklaganj, Chandigarh and Vidarbha 48 Green
5-10-88 6 Vashi, Chinchpokli, Ahmedabad, Vijayawada, Delhi and Chennai 48 Green
6-10-88 6 Pune, Jamshedpur, Ahmedabad, Kundli, Indore and Cochin 48 Green
7-10-88 6 Chinchpokli, Vashi, Chandigarh, Ghaziabad, Trichur and Ahmedabad 48 Green
8-10-88 5 Pune, Jaipur, Delhi, Chennai, and Vidarbha 48 Green
1 Bhubaneswar and Cuttack 12 Green
10-10-88 1 Goa 38 Green, 10 White
5 Delhi, Chandigarh, Ghaziabad, Shuklaganj and Jaipur 48 White
11-10-88 6 Chandigarh, Delhi, Shuklaganj, Bangalore, Ahmedabad and Vidarbha 48 White
12-10-88 6 Ghaziabad, Delhi, Chandigarh, Chennai, Kundli and Jaipur 48 White
13-10-88 6 Ahmedabad, Chandigarh, Delhi, Jaipur, Shuklaganj and Salem 48 White
14-10-88 6 Chandigarh, Delhi, Indore, Ahmedabad, Ghaziabad and Vidarbha 48 White
15-10-88 4 Jaipur, Shuklaganj, Chandigarh and Ahmedabad 48 White
3 Patna, Secunderabad and Trichur 24 White, 24 Blue
17-10-88 6 Ahmedabad, Bangalore, Chinchpokli, Vashi, Vidarbha and Calcutta 48 Blue
18-10-88 6 Asansol, Ahmedabad, Chinchpokli, Pune, Guwahati and Chennai 48 Blue
19-10-88 6 Cochin, Vashi, Salem, Jamshedpur, Ahmedabad and Ahmedabad 48 Blue
20-10-88 6 Ahmedabad, Calcutta, Vidarbha, Indore, Pune and Secunderabad 48 Blue
21-10-88 6 Ahmedabad, Chinchpokli, Bangalore, Trichur, Patna and Chandigarh 48 Blue
22-10-88 6 Vashi, Delhi, Pune, Vidarbha, Ahmedabad and Ahmedabad 48 Blue
24-10-88 7 Kundli, Shuklaganj, Ghaziabad, Calcutta, Jamshedpur,
Vijayawada and Salem 48 Blue
25-10-88 6 Chennai, Secunderabad, Delhi, Chinchpokli, Ahmedabad and
Ahmedabad 48 Green
26-10-88 7 Vijayawada, Chennai, Kundli, Chinchpokli, Vashi, Ahmedabad
and Ahmedabad 48 Green
27-10-88 9 Cochin, Trichur, Bangalore, Shuklaganj, Chinchpokli, Ahmedabad,
Chinchpokli and Ahmedabad 48 Green
28-10-88 7 Vidarbha, Salem, Bangalore, Chinchpokli, Ahmedabad,
Chinchpokli and Ahmedabad 48 Green
29-10-88 8 Indore, Delhi, Chandigarh, Chennai, Salem, Secunderabad, 48 Brown
Ahmedabad and Ahmedabad
31-10-88 7 Ku n dli, Shuklaganj, Ghaziabad, Jaipur, Cochin,
Trichur and Bangalore 48 Brown

EXHIBIT 16
Despatch Schedule for 300-litre Refrigerators
White Green Blue Brown
Delhi 60 55 10 10
Jaipur 0 6 3 3
Chandigarh 21 10 5 6
Kundli 10 6 2 3
Ghaziabad 12 6 6 6
Lucknow 0 0 0 0
Shuklaganj 15 6 0 0
Chennai 11 5 5 0
Salem 0 5 5 5
Secunderabad 10 5 5 0
Vijayawada 0 0 0 0
Cochin 5 5 5 0
Trichur 0 0 10 0
Bangalore 21 11 5 5
Chinchpokli 21 10 21 0
Pune 10 10 10 0
Vashi 0 0 0 0
Vidarbha 10 10 10 0
M.P./Indore 10 10 10 0
Goa 0 10 0 0
Ahmedabad 42 42 21 21
Calcutta 7 14 0 0
Asansol 0 0 0 0
Jamshedpur 0 0 0 0
Patna 0 2 1 0
Guwahati 0 0 0 0
BBSR/Cuttack 2 4 2 0
Siliguri 0 0 0 0
Vil/Gate 0 0 0 0
EXHIBIT 17
Despatch and Distance from Warora
S. No Stocking Centre 165 ltr 300 ltr Distance LP Truck Transit
(km) load (Rs) Time (days)
North Zone
1. Delhi 7,684 998 1 , 10 0 6,600 5
2. Jaipur 3,478 159 1,130 6,100 5
3. Chandigarh 4,405 344 1,350 7,350 6
4.' Kundli (N. Delhi) 2,073 80 1,200 6,500 6
5. Ghaziabad (N. Delhi) 4,069 162 1 , 1 20 6,800 6
6. Lucknow 882 42 980 5,700 5
7. Shuklaganj (N. Lucknow) 2,974 160 1,000 5,100 5
South Zone
8. Chennai 2,817 248 1,100 5,300 5
9. Salem 3,087 53 1,170 5,300 6
10. Secunderabad (Hyderabad) 2,089 146 450 2,970 3
1 1. Vijayawada 1,596 29 670 3,630 4
12. Cochin (N. Trichur) 1,775 97 1,510 6,725 6
13. Trichur 2,008 48 1,435 6,535 6
14. Bangalore 3,194 276 960 4,700 5
West Zone
15. Chinchpokli (Mumbai) 6,034 319 920 3,850 4
16. Pune 3,015 156 960 3,850 4
17. Vashi (Mumbai) 4,743 216 900 3,850 4
18. Vidharbha (Region
around Warora) 3,195 180 11 5 1,320 1
19. M.P./Indore (N. Bhopal) 2,068 11 5 500 2,805 3
20. Gwalior 1,584 63 800 2,960 3
21. Goa (Panaji) 168 10 1,100 5,200 5
22. Ahmedabad 9,821 607 1,050 4,300 5
East Zone
23. Calcutta 2,281 168 1,335 6,150 6
24. Asansol (N. Dhanbad) 768 0 1,380 5,700 5
25. Jamshedpur (N. Ranchi) 1,515 81 1,210 5,750 5
26. Patna 792 3 1,080 5,750 6
27. Guwahati (Dispur) 2,173 105 2,100 9,800 11
28. BBSR/Cuttack 504 8 945 5,250 5
29. Siliguri 240 0 1,300 7,500 7
30. Vil/Gate 714 0 5
Note: The above data is from May 1988 to February 1989.
An LP (Long Platform) truckload can carry 48 165-litre or 21 300-litre refrigerators.

Logistics Management at Voltas

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5

Logistics Management at Voltas

proper market servicing and management of costs.

appropriately defined in the context of plant location.

other related operational costs.

of general questions arise:

1. What should be the products made at these locations?

2. What should be the volumes manufactured at the different locations?

3. What should be the markets served by these locations?

poses of a logistics decision.

Questions for Discussion

value added (total product cost-cost of raw materials).

provide an analysis to come up with a decision of a location.

Approach for Analysis

appropriately to a manufacturing location before calculating the relevant costs.

for this purpose.

Logistics Management at Voltas (VOLTAS)

the mechanical, electrical, textile, agricultural, refrigeration and airconditioning, pharmaceutical

activity, which included assembling of airconditioners and water coolers.

number of foreign companies.

it meant maintenance of a large inventory of spare parts.

and Metals Trading Corporation further restricted Voltas' business.

3. Set up own manufacturing facilities.

Prepared by G. Raghuram. Assisted by G. Padmanabhan.

Copyright © Indian Institute of Management, Ahmedabad.

located in Maharashtra and West Bengal.

1. Agro-industrial products and pumps division (AIP)

2. Airconditioning and refrigeration business group (ACRBG)

3. Appliances business group (ABG)

4. Chemicals division (CHEMICALS)

5. Electrical business group (EBG)

6. Engineering projects division (EPD)

7. Machine tool division (MTD)

8. Materials handling business group (MHBG)

9. Mining and construction equipment business group (M&CEBG)

10. Pharmaceuticals and consumer products division (PCP)

11. Refrigerator business group (RBG)

12. Textile machinery division (TMD)

from India and abroad.

as also the benefits of technical assistance and quality control by Valtas.

The company operates through:

Lucknow, Chennai and Secunderabad.

(c) Sixteen offices located at Asansol, Bhopal, Bhubaneswar, Chandigarh, Cochin,

Switzerland, and by Tata Ltd in London, UK.

The company has six manufacturing facilities as follows:

and construction equipment business group.

cal products for the electrical business group.

products for the mining and construction equipment business group.

Centralised Service Departments

affairs, central purchase (including transport services) and central administration.

group-wise value added statement for the distributed products.

Physical Distribution Management

tures its own item, namely, the refrigerator business group.

Refrigerator Business Group (RBG)

the year 1 9 9 1 , at Warora.

are in eastern Maharashtra.

thereby ensuring high reliability in power supply.

(a) to expand the existing plant at Warora;

(b) to consider a new location.

The considerations for a new location would be:

(b) Competitors' location, marketshare and plans.

(c) Capital cost, backward area benefits, etc.

(d) Access to national highways, availability of infrastructure.

(e) Raw material transport cost.