In 2011, Voltas became a market leader in room air conditioners, which is the fastest growing segment in ACs and worth Rs 6,000 crore (Rs 60 billion) in terms of primary sales.
A year later, the Tata brand became the number one player in terms of secondary sales as well, with a market share of 18.3 per cent (Nielsen data).
This improved further to 20.3 per cent in the September 2012 quarter, widening the gap with the second largest player, LG.
This comes after 12 consecutive years of losses, followed by a total turnaround, and then five years of competing against fierce multi-national competition.
That's quite a distance for a company which had been losing market share and had dropped to the seventh position between 1993 and 2001 after multinationals such as Carrier, Hitachi, Whirlpool, Samsung and LG entered the Indian consumer durables market and launched a price war.
As a result, the unitary cooling business (ACs form part of this business) started incurring heavy losses.
For Pradeep Bakshi, now executive vice-president of the UCP division, all that is distant memory. "We obviously know India and the Indian psyche better than anybody else as far as AC is concerned," Bakshi says.
He has a point. For, till 2005, Voltas was largely present only in the institutional business (room ACs sold to private and government offices) and neglected the retail and household business.
Bakshi says Voltas has been proactive in changing its communication strategy as well. For example, it recently shifted from its earlier positioning of 'Sensible Cooling' to 'All Weather AC's'.
The latest positioning is a move to go beyond the conventional 'cooling' route followed by other brands and focus on the concept of climate control with a strategy to de-seasonalise the brand.
Voltas was the first to introduce energy-labelled products even before the government made it mandatory and looked at educating customers on the efficient usage of the brands' products.
This was after research revealed that sales growth was inversely proportional to the cost of AC usage. It then expanded its retail presence from a small base of 1,000 touch points to 6,000-plus in the past five years that helped it enter tier-II and -III
The latest sales push came from the launch of an "all-weather AC" in March 2012, giving Bakshi enough confidence to claim that one out of four AC buyers will be a Voltas customer.
"With the pace we are growing, we target 25 per cent market share by FY15," he says, adding in the first half of this year, Voltas grew 30 per cent in volume terms and 18-20 per cent in value terms.
The latest positioning of all-weather AC seeks to convey that Voltas products can tackle every extreme climatic condition that the country witnesses. The campaign shows a hapless man in the process of settling into a new place yet again as he is constantly transferred by his supervisor.
However, the man always manages to maintain his cool with the help of his 'all-weather AC' that maintains the temperature at a desired level, irrespective of the conditions. The sales growth shows the campaign has clicked.
But being a market leader has come at a heavy cost. After improving since FY07 and reaching a peak of 10.6 per cent in FY10, the profit before interest and tax (PBIT) margin of the UCP division slipped to 8.5 per cent in FY12 and further down to 8.2 per cent in the first half of FY13, despite 14-15 per cent price hikes in the March 2012 quarter and 5 per cent in the June 2012 quarter.
Bhavesh Chauhan, analyst at Angel Broking, points out that Voltas has not been able to raise prices in proportion to the rise in input costs due to lower demand and higher competition. The company has guided a PBIT margin of 7-7.5 per cent for FY13.
Analysts fear if profitability does not improve sooner or later, the company will be back to square one. Lokesh Garg, analyst at Kotak Institutional Equities, says, "Voltas's growth so far was primarily on the back of market share gain as well as price hikes, which may not continue in FY14."
Price hike will be a tough decision as the industry scenario is not looking very promising (even after two consecutive years of sales decline). On the other hand, the rupee is depreciating again (imported components constitute 60-70 per cent of total costs) and commodity prices are behaving in an erratic way, putting upward pressure on costs.
That's some food for thought for Bakshi.