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 Ebiçlioglu, 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.