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Voltas to manufacture fridges for Samsung

BS Corporate Bureau in Mumbai

Voltas, the engineering and air-conditioning major, has struck a outsourcing deal with Samsung Electronics India.

The Korean major will outsource direct-cool refrigerators from Voltas as per its requirements and sell them under the Samsung brand in India. As per the pact, Samsung will source around 150,000 refrigerators from Voltas.

The development comes at a time when LG Electronics pact with Voltas comes to an end next year. The Rs 900 crore (Rs 9 billion) contract with LG was signed in 2000.

Also, with LG planning to manufacture direct-cool refrigerators on its own could jeopardise the original equipment manufacturer business for Voltas. Meanwhile, Voltas is looking for long-term sourcing ties with other white goods majors.

Voltas had earlier sold part of its white goods business to Sweden's Electrolux AB but had retained the Hyderabad refrigerator unit. It used to make refrigerators under the Voltas and Allwyn brands.

As part of the deal, it had sold the Allwyn brand to Electrolux. The Hyderabad unit are now used to manufacture refrigerators for LG and visi-coolers for a host of companies including soft-drinks major Pepsi.

Voltas main business continues to be air-conditioners. Its manufacturing facility at the Union territory of Dadra was transferred to a 50:50 joint venture with Fedders Corporation of the US.

Fedders is planning to launch its range of air-conditioners next year and would compete with Voltas in the market.

Voltas has crawled back as the second-largest brand in room air-conditioners. Room air-conditioners account for 60 per cent of the total AC mart.

...plans fresh VRS

Voltas is planning a fresh round of voluntary retirement scheme, at an estimated Rs 30 crore (Rs 3 billion), to prune its wage bill.

Around 600 surplus workers are expected to be axed through the new scheme, Ashok Soni, managing director, said.

"We still have at least 600 excess manpower. It is not down-sizing but rightsizing our 4,400 workers," Soni added.

Voltas has seen its employee strength lowered from over 10,000 following a large-scale restructuring.

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