Global heat waves emanating from Climate Change is reality. Environmental degradation has started casting its impact on every nook and corner on the planet. The Global Risks Report 2021 of the World Economic Forum (WEF) has classified cold fronts and heat waves as Global Risk under Extreme Weather Events resulting from degradation of Environment. The IPCC report highlights that global warming level of 1.5°C may be breached in coming years due to rapid greenhouse gas emissions. If planet has to remain habitable, Communities has to come together to take fast and immediate actions for reduction in greenhouse gas emissions, otherwise consequences will be ir-reversible.
An earlier report of the Ministry of Earth Sciences, Government of India also highlights that India has been witnessing rising temperature, decreasing monsoon precipitation and droughts etc due to influence of human activities.
Issue is no more limited to textual discussion. It has become a reality now. Australia, Japan, Germany and various other Nations are experiencing unprecedented heat waves, emanating from Climate Change. Even if Nations succeed in keeping the Global temperatures withing the limit of 1.5°C or even 2°C, Global Temperature will have an enduring impact on human beings and heat waves will be one of its biggest examples. Average temperature of the Indian subcontinent will also rise, in tandem with the impact of environmental degradation. Rising temperature will result into higher demand for ACs in the country. Given the rising heat waves and prolong summer in India, within few years AC will be regarded as necessity and not discretionary spending or luxury. In India, AC penetration is still lesser than 10% when compared to the 90% in developed economies. Thus, there is a huge potential for AC Industry to grow.
Further, recent developments are indicative of the fact that World is moving towards the Geopolitical Shift. Apart from the core economics of cost, trade relations between the Countries will also be aligning based on the values and risk shared by them. The US China trade war and supply chain disruption will be giving newer opportunities to other Nations, by way of shift in some portion of manufacturing base from China. India is uniquely positioned and has some inherent strength, which will help India to gain export share from this tectonic shift. Government’s decision to support manufacturing through PLI incentive, will play a significant role in making India a Global manufacturing hub for ACs under Atmanirbhar Bharat mission and will help in building an Export market for Indian players.
Voltas is a dominant player. It has a wide portfolio of product including Air Conditioners, Air Coolers, Water Dispensers, Water Coolers, Commercial Refrigeration products and other services. Given the massive demand arising in future in home and overseas market, Voltas is uniquely positioned to benefit for it. Government has a budgetary outlay of approx. Rs 6000 crore, which will be provided till FY 2028-29. Voltas will be a key beneficiary of the scheme. Apart from the business, the Company is part of Tata Group which provides the Management best in class mentorship, guidance and access to Group Network. Voltas has best in class Corporate Governance which is evident by value created by Company for its shareholders. Changing environment will impact Global lifestyle and consumption. Rising temperature and Heat Waves will make AC necessary for every Indian Household in few years from now. In not-so-distant future, AC will no more be a luxury item but a necessary requirement.
Bureau Galactik Views
(This is not an investment advice)