VOLTAS LIMITED ELECTRICAL AND MECHANICAL DIVISION QATAR BY: RIDHI MAZUMDAR VISION The Voltas story demonstrates that an ambitious goal and vision can drive both internal transformation and business growth. Thirteen years ago, Voltas was on the verge of shutting down that is when voltas fornulated a brand new vision plan named “MEGAVOL”. Megavol — a business plan that aimed to achieve Rs100,000 million turnover with 10 per cent profitability by 2010-11. “Ourplan involved pursuing both organic and inorganic growth,” says managing director Ashok Soni, the man who took over the wheel in 2001 and has steered the organisation to its present course.
The Megavol plan has brought about several dramatic changes in Voltas, and these have mainly been the reason for both Voltas’s growth spurt and its relative insulation from the recession. MISSION Voltas is determined to strengthen our position in exiting geographical locations and focus to rapidly expand our business into selected new overseas markets in the field of Electrical and Mechanical and related projects by offering high quality, cost effective project management and engineering services to meet the requirements of our valuable customer.
Their mission also includes: ·Minimizing wasteful energy consumption in their branded products ·Forming representations and alliances with global technology leaders who also follow a Green path ·Offering and encouraging the use of technologies that purify the air, lower energy costs, and purify polluted water and industrial/urban effluents. ·Following the most stringent practices of eco-friendliness, sustainability and safety in their manufacturing operations. VALUE STATEMENT Integrity: Formal adoption of tata code of conduct
Understanding: Employee welfare, Equal Opportunity Employer, Affirmative action Volunteering. Excellence: Adoption of Tata Business Excellence Module for for process excellence, Local Excellence Awards, Process Management and Process Improvement. Unity: Team Based Culture, Partnering with Customers and Co-creation, Respect for Local Culture. Resposibility: Climate Change Policy. HIGHLIGHTS OF STRATEGIC PLAN The company had an effective risk management model in place.
This yielded realistic profiles of any given job’s vulnerability in terms of the political landscape, the geographic allocation,the economic and investment climate. The highlights of the Voltas Strategic Plans are stated below: ·Market assessment and Internal Analysis As EMD operates in differents geographical regions,environment scan is done for each region. Detailed intenal analysis is carried out to ascertain internal strength,weaknesses, critical sucess factors, measurement and analysis of business results etc.
Market assessment also includes stake holders analysis,competitors analysis,analysing oportunities and threats. ·Strategy development: Strategy direction setting- identify potential new geographies, new vertical,adjacent business linesThis includes the strategic challenges,objectives and probable strategic directions. Strategy Formulation-All assumptions,scenarios and blind spots are discussed during this phase and needs of further data collection are identified ·Strategy Deployment
Making individual Balance Score Card. Preparing an annual business plan and an action plan that will lead to performance contracting. Target setting resource allocation- This includes analysing revenue budgets,analysing capital expenditure and preparing budget for special strategic initiatives. ·Review and improvement Improvement-conducting evaluation and improvement theough learning Strategic Reviews- Quaterly,Half yearly, Annual reviews are maintained. Board reviews are carried out followed by mid-course corrections.
All of the above mentioned plans are followed by developing Operating Plans and cascading of Divisional Balance Scorecard, Compromising perfomance measures, targets, timeframes and strategic initiatives. HIGHLIGHTS OF HUMAN RESOUCE PLAN The cornerstone of the Voltas Human Resources Management philosophy is the conviction that the well-being of the company and of its people are interdependent; and that the company’s most valuable assets are its people. The Human Resource Managment Plan includes: ·Employing the most competent, on the basis of merit Ensuring every employee is treated with dignity and respect, and in a fair, consistent and equitable manner ·Creating a stimulating, enabling and supportive work atmosphere ·Aiding and Encouraging employees in realizing their full potential CORPORATE STRATEGY Based on the recommendations of the Tata Strategic Management Group (the management consultancy that’s part of the Tata Group), Voltas began an internal regeneration drive. A detailed study was made on how the market would shape up, the competitors, their offerings, strategies, the market spread – in short, everything related to the Indian AC market.
The recommended solution: transform Voltas from an engineering to a marketing company. To effect that transformation, Voltas planned a ‘Big Bang strategy’ that spelled out ways to revive every facet of the company – product, channel, systems, service, costs and brand. While in the good old days, Voltas had earned profits keeping its margins high, the MNCs had changed the rules. They had unleashed a price war – slashed prices and cut margins – with the result that getting ahead in the AC market now depended on volume generation. “Volumes became critical for survival,”. The key bjectives of the “Big Bang” were, therefore, to increase revenues from sales achievements, and make Voltas the lowest-cost manufacturer. The company identified opportunities in the Middle East and Asia. The Middle East seemed the easier entry as It was growing at a faster pace Voltas’s first project in the Middle East was installing the air conditioning system at the new palace of the Sultan of Oman. The firm then secured a contract with a Saudi Arabian township to provide all of its municipal works, including a water-supply system, a telecom network, a captive power plant and, of course, electro-mechanical service.
It was a coming of age for the company and moved it to a new level of competency. RESTRUCTING EXAMPLES ·Developing new products:The challenge was not only to come up with a range that matched competition, but to come up with it in a cost-effective manner. They needed a partner that could not only provide them with technology, but also help in keeping the manufacturing cost low. First, it helped Voltas plug into Fedders’ technology and design know-how to launch new- generation products. The result was the Vertis brand, with a range that matched competitors offerings .
In fact, between 2001 and 2004 Voltas launched over 74 new products, revamping its entire product line. This includes industry firsts such as a 1. 5 tonne AC – now a staple product offering. ·Getting rid of unprofitable products: The retail refrigerator business, a part of the unitary cooling business of Voltas, accounted for most of the division’s losses. Voltas refrigrator business which was loss making was closed down to focus on its core business of airconditioning. Voltas unitary cooling business division aimed to cross Rs. 0 billion in sales by 2008. GROWTH EXAMPLES ·Job Creation: Diversification into electro-mechanical products and serivices accross geographies helped in creation of jobs. Which let to emploment of a large number of skilled engineering worforce. This was done to have a diversified business model for sustainability and enhancing immunity to global recessionary trends. Coupled with its diversification strategy voltas also kept pace with the industry benchmarks in ters of compensation and benifits to its employees. ·Training and Development:
Voltas makes substancial investments in terms of learning and development and carrier growth of its employees. Business responsive training needs are identified by a structured process combing business needs with individual aspiration. By spreading out in the gulf region, Voltas has seen a windfall in projects. Its international operations have also been growing, with 48% CAGR (compound annual growth rate) in revenues and 50% in profits in the past four years. As of the end of December 2009, its Middle East project portfolio is estimated at US$760 million.
Today, Voltas has the financial capacity to handle projects worth US$200 million on its own. The recently awarded contract for the Sidra Medical and Research Center in Qatar is an example. It is a significant jump over its US$100 million project capability a couple of years earlier. MAINTENANCE EXAMPLES ·Maintain Market share: Another move – literally, this time – that helped Voltas was shifting its manufacturing base, in 2000, from Thane to Dadra, which is a sales tax-exempt zone. The company has passed on that 12. 5 per cent saving to its consumers, which naturally has helped sales.
Within a year of the Big Bang, Voltas’s market share started rising. From 7 per cent in 2001, it climbed to 9. 2 per cent the next year and is now at around 16 per cent. “The numbers that they were achieving in a year, they now got in a month. ” “With the restructuring well in place and a robust order book position, the company has confidence that a strong growth trajectory will be maintained as we go forward. The focus on streamlining processes, cost and financial management has also helped in the growth of profitability. ” – M M Miyajiwala, Executive Vice President (Finance) and CFO, Voltas Ltd. in 2006 HR DEPARTMENT STRATEGIES Voltas Human resource strategy operates at two levels: one is the individual level, addressing issues such as job specifications, performance indicators, assessment and compensation. The other is the organisational level, involving the structure and broader issues like ethics and corporate-culture. During the development of SBP(Strategic Business Plan) the HR capabilities and capacities requirements are reviewed and key HR action plans are developed to enhance division HR preparednessand ensure timely deployment at projects.
A broad requirement of manpower based on targetted projects is drawn up in and the same is compared with the demobilisation plan of the projects within EMD(Electro Mechanical Division). Action plans are formulated and incorporated into service level agreements with HR. HR plans focus on developing critical skill sets in the division including professional certifications. The balance scorecard spells out the key performance measures and indicators corresponding to the strategic objectives and the action plans.
During the strategic planning process EMD sets or modifies its long term and short term performance targets based on assessment of its resources capabilities and opportunities and keeps them in line with strategic objectives,vission and mission. EMD sets bench marks from tata group of companies in the projects business. HR organisation structure at corporate and business group level is designed to ensure mutilevel integrated planning and delivery of services accross loactions. Have the above mentioned strategies been effective?
Yes,certainly the above mentioned strategies have been very effective giving the ultimate results possible. The HR strategy focussing on capacity and capability development has paid handsomely over the years. The well established recruitment and deployment process has ensured timely availability of suitable and skilled resources. Clearly defined performance management system has ensured a high performance culture. The competitive compensation structure aligned with the market coupled with reward and recognition measures ensures a high degree of satisfied and well motivated workforce.
Learning and development and carrier progression through well established processes has helped in creation of a leadership pipeline matched to the sucession planning resulting in adequate growth opportunitieswith the organisation. Possibilty of lateral movement of employees within various business clusters of voltas has also within the tata group ensured high retention and engagement levels. SOURCE 1. Voltas Internal Assessment Application(electrical and mechanical division,international operations)-2010 2. Detailed interview with Mr. Randhir Mazumdar- Head of Human Resource and Admin-Qatar.