MIRA
INFORM REPORT
|
Report Date : |
23.08.2008 |
IDENTIFICATION
DETAILS
|
Name : |
VOLTAS LIMITED |
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Registered
Office : |
Voltas House
"A", Dr. Babasaheb Ambedkar Road, Chinchpokli, Mumbai - 400033, Maharashtra,
India |
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Country: |
India |
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Financials (as
on): |
31.03.2008 |
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Date of
Incorporation : |
06.09.1954 |
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Com. Reg. No.: |
11- 9371 |
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CIN No.: [Company
Identification No.] |
L29308MH1954SGC009371 |
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TAN No.: (Tax
Deduction & Collection Account No.) |
MUMVO4539D/
MUMVO78426 |
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PAN No.: (Permanent
Account No.) |
AAACV2809D |
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Legal Form : |
A Public Limited
Liability Company. The Company’s Shares
are Listed on the Stock Exchanges. |
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Line of
Business : |
Manufacturing of
Air Conditioners, Refrigeration Equipments, Engineering, Electrical and
Agricultural Equipments. |
RATING &
COMMENTS
|
MIRA’s Rating
: |
A |
RATING |
STATUS |
PROPOSED
CREDIT LINE |
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|
56-70 |
A |
Financial & operational base are regarded
healthy. General unfavourable factors will not cause fatal effect.
Satisfactory capability for payment of interest and principal sums |
Fairly Large |
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Maximum Credit
Limit : |
USD 27000000 |
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Status : |
Good |
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Payment
Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is a part
of TATA Group, country's eminent industrial house. Available information
indicates high financial responsibility of the company. Financial position is
good. Payments are correct and as per
commitments. The company can
be considered normal for business dealings at usual trade terms and
conditions. |
LOCATIONS
|
Registered
Office : |
Voltas House
"A", Dr. Babasaheb Ambedkar Road, Chinchpokli, Mumbai - 400 033,
Maharashtra, India |
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Tel. No.: |
91-22-56656666/
46102000/ 22618131 |
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Fax No.: |
91-22-56656311/
22/ 46102331/ 22618504 |
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E-Mail : |
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Website : |
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Factory 1 : |
Thane Plant
C/o. Fine Chemical Industries Limited, C-8, TTC Pawane, MIDC, Opp.
NOCIL Rubber Factory, Navi Mumbai -
400704, Maharashtra |
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Tel No.: |
91-22-7670357 / 7681048
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Factory 2 : |
Shreenath Industrial Estate, C Building, Survey No.197, Near Dadra Check Post, Dadra 396230, India |
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Factory 3 : |
Plot Nos.1-5, Sector 8 I.I.E. Pantnagar Industrial Area, Dist. Udham Singh Nagar, Rudrapur, Uttarakhand 263145, India |
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Factory 4 : |
Sanatnagar, Hyderabad
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DIRECTORS
|
Name : |
Mr. A. Soni |
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Designation : |
Managing Director |
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Name |
Mr. Ishaat
Hussain |
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Designation |
Chairman cum
Managing Director |
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Date of Birth |
02.09.1947 |
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Qualification |
Chartered
Accountant, London |
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Date of
Joining |
26.04.1999 |
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Other
Directorship |
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Chairman/Member
of other company |
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Name |
Mr. N. D. Khurody |
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Designation |
Director |
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Date of Birth |
26.10.1936 |
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Qualification |
M.A (Economics) |
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Experience |
43 years |
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Date of
Joining |
26.12.1995 |
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Other
Directorship |
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Chairman/Member
of other company |
Audit Committee –
Member |
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Name |
Mr. Bir D. Singh |
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Designation |
Director |
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Date of Birth |
03.07.1939 |
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Qualification |
B. Tech, (Hons.)
IIT, Kharagpur |
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Date of
Joining |
26.12.1995 |
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Other
Directorship |
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Chairman/Member
of other company |
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Name : |
Mr. N. M. Munjee |
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Designation : |
Director |
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Name : |
Mr. N. J. Jhaveri |
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Designation : |
Director |
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Name : |
Mr. S. D.
Kulkarni |
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Designation : |
Director |
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Name : |
Mr. Yash Paul |
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Designation : |
Director |
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Name : |
Mr. S. N.
Tripathi |
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Designation : |
Director |
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Name : |
Mr. Ravi Kant |
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Designation : |
Director |
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Name : |
Mr. N. N. Tata |
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Designation : |
Director |
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Name : |
Mr. S. N. Tripathi |
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Designation : |
Executive
Director |
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AUDIT
COMMITTEE : |
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REMUNERATION
COMMITTEE : |
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SHAREHOLDERS/
INVESTORS GRIEVANCE
COMMITTEE : |
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CORPORATE
MANAGEMENT : |
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KEY EXECUTIVES
|
Name : |
Mr. V. P.
Malhotra |
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Designation : |
General Manager –
Taxation and Company Secretary |
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Name : |
Mr. S. R.
Srinivasan |
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Designation : |
Executive Vice
President |
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Name : |
Mr. P. N. Dhume |
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Designation : |
Executive Vice President |
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Name : |
Mr. M. M.
Miyajiwala |
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Designation : |
Executive Vice
President |
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Name : |
Mr. A. J. Gole |
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Designation : |
Vice President |
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Name : |
Mr. S. Bilgi |
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Designation : |
Vice President |
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Name : |
Mr. Sanjay Johri |
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Designation : |
Executive Vice
President |
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Name : |
Mr. S.
Venkatraman |
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Designation : |
Executive Vice
President |
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Name : |
Mr. A. K. Joshi |
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Designation : |
Vice President |
MAJOR SHAREHOLDERS
/ SHAREHOLDING PATTERN
(As on
31.03.2008)
|
Names
of Shareholders |
No. of Shares |
% of Issued Share Capital |
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Tata Group of Companies |
91171055 |
27.55 |
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Mutual Funds |
73443196 |
22.20 |
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Nationalised Banks |
39116296 |
11.82 |
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Financial Institutions |
36958284 |
11.17 |
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Foreign Companies |
18230714 |
5.51 |
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FIIs |
3590001 |
1.08 |
|
NRIs |
294550 |
0.09 |
|
Bodies Corporate |
89850 |
0.03 |
|
Directors |
1990 |
0.00 |
|
Public |
67988804 |
20.55 |
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|
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Total |
330884740 |
100.00 |
(As on 31.03.2008)
|
Names
of Shareholders |
No. of Shares |
% of Issued Share Capital |
|
Tata Sons Limited |
78731780 |
23.79 |
|
Life Insurance
Corporation of India |
25608246 |
7.74 |
|
Citigroup Global
Markets Mauritius Private Limited |
10419862 |
3.15 |
|
Tata Investment
Corporation Limited |
9552330 |
2.89 |
|
ABN Amro Bank N V
London Branch |
7270469 |
2.20 |
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Nomura India
Investment Fund Mother Fund |
6916850 |
2.09 |
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General Insurance
Corporation of India |
502458 |
1.52 |
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PCA India
Infrastructure Equity Open Limited |
4613679 |
1.39 |
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The New India
Assurance Company Limited |
4363080 |
1.32 |
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ICICI Prudential
Life Insurance Company Limited |
4092969 |
1.24 |
|
CAAM Funds India |
3800000 |
1.15 |
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JM Trustee Co. Limited
A/c JM Mutual Fund - Basic |
3783818 |
1.14 |
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The Oriental Insurance Company Limited |
3560470 |
1.08 |
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Merrill Lynch India Equities Fund (Mauritius) Limited |
3348459 |
1.01 |
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JM Financial Mutual Fund – JM Contra Fund |
3335162 |
1.01 |
BUSINESS DETAILS
|
Line of
Business : |
Manufacturing of
Air Conditioners, Refrigeration Equipments, Engineering, Electrical and
Agricultural Equipments. |
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Products : |
·
Refrigerators
Household Compression Type ·
Air Conditioning
Machines Window or Wall Types Self Contained ·
Refrigerating Equipment Absorption Heat Pumps &
Centrifugal Chillers |
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Exports : |
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Countries : |
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Imports from : |
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Countries : |
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PRODUCTION STATUS
|
Particulars |
Unit |
Installed
Capacity |
Actual
Production |
|
Airconditioner
and Water Coolers: |
|
|
|
|
Room Air Conditioners |
(Numbers) |
|
868 |
|
Airconditioners for Specialised |
(Numbers) |
|
3145 |
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Applications |
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|
|
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Water Coolers |
(Numbers) |
630000 |
13317 |
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White
Goods: |
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|
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Refrigerators |
(Numbers) |
|
134835 |
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Commercial Refrigeration |
(Numbers) |
|
35043 |
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Open Type Compressores with |
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Accessories |
(Numbers) |
1000 |
458 |
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Packaged Airconditioners |
(Numbers) |
10050 |
7382 |
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Package Chillers |
(Numbers) |
830 |
417 |
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Semi Hermetic Compressores |
(Numbers) |
3600 |
1572 |
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Materials
Handling Equipment: |
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Forklift Trucks |
(Numbers) |
500 |
539 |
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Mining
and Other Engineering Equipment: |
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Hydraulic Truck Cranes/Rough Terrain
Cranes |
(Numbers) |
100 |
2 |
|
Power Driven Pumps |
(Numbers) |
2400 |
298 |
GENERAL
INFORMATION
|
No. of
Employees : |
7378 |
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Bankers : |
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Facilities : |
SECURED LOANS 31.03.2008 (Rs.
In Millions) Loans From Banks 200.000 (Deposit of title deeds of certain immovable properties of the company) Cash Credit From Banks 276.660 (Secured against assignment of contract Dues and lien on Term Deposits) Total
476.660 |
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Banking Relations : |
Good |
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Auditors : |
|
|
Name : |
S. B. Billimoria
and Company Chartered
Accountants |
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|
Name : |
Messrs Deloitte
Haskins and Sells Chartered
Accountants |
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Solicitors : |
Messrs Mulla and Mulla and Craigie, Blunt and Caroe |
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Associates : |
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Subsidiaries : |
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Joint Venture : |
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Holding
Company : |
Tata Sons Limited |
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Membership : |
Confederation of
Indian Industry |
CAPITAL STRUCTURE
Authorised
Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
600000000 |
Equity Shares |
Rs.1/- each |
Rs.600.000 millions |
|
4000000 |
Redeemable Preference Share |
Rs.100/- each |
Rs.400.000 millions |
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Total: |
|
Rs.1000.000 millions |
Issued,
Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
330884740 |
Equity Shares |
Rs.1/- each |
Rs.330.885 millions |
|
Less: |
Call in Arrears |
|
Rs.0.190 million |
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|
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|
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Total: |
|
Rs.330.695 millions |
FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED BALANCE SHEET
|
SOURCES OF FUNDS |
31.03.2008 |
31.03.2007 |
31.03.2006 |
|
SHAREHOLDERS
FUNDS |
|
|
|
|
1] Share Capital |
330.695 |
330.683 |
330.600 |
|
2] Share Application Money |
0.000 |
0.000 |
0.000 |
|
3] Reserves & Surplus |
5052.507 |
3476.848 |
2083.500 |
|
4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
NET WORTH
|
5383.202 |
3807.531 |
2414.100 |
|
LOAN FUNDS |
|
|
|
|
1] Secured Loans |
476.660 |
821.419 |
470.100 |
|
2] Unsecured
Loans |
0.000 |
0.000 |
250.000 |
|
TOTAL BORROWING |
476.660 |
821.419 |
720.100 |
|
DEFERRED TAX LIABILITIES |
0.000 |
0.000 |
0.000 |
|
|
|
|
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TOTAL
|
5859.862 |
4628.950 |
3134.200 |
|
|
|
|
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APPLICATION OF
FUNDS |
|
|
|
|
|
|
|
|
|
FIXED ASSETS [Net
Block] |
1407.465 |
1238.378 |
1238.300 |
|
Capital
work-in-progress |
187.521 |
60.349 |
109.900 |
|
|
|
|
|
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INVESTMENTS |
2679.263 |
1374.106 |
610.300 |
|
DEFERREX TAX
ASSETS |
204.312 |
296.701 |
0.000 |
|
|
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CURRENT ASSETS,
LOANS & ADVANCES |
|
|
|
|
Inventories |
6095.857 |
4825.080 |
12029.500 |
|
Sundry Debtors |
5316.916 |
4337.802 |
3976.600 |
|
Cash & Bank Balances |
2752.078 |
1402.501 |
1086.300 |
|
Loans & Advances |
1432.369 |
1697.405 |
1787.200 |
|
Total Current Assets |
15597.220 |
12262.788 |
18879.600 |
|
|
|
|
|
Less : CURRENT
LIABILITIES & PROVISIONS
|
|
|
|
Current Liabilities
|
12173.931 |
8930.778 |
16570.600 |
Provisions
|
2041.988 |
1672.594 |
1133.300 |
|
Total Current Liabilities |
14215.919 |
10603.372 |
17703.900 |
Net Current Assets
|
1381.301 |
1659.416 |
1175.700 |
|
|
|
|
|
|
MISCELLANEOUS EXPENSES |
0.000 |
0.000 |
0.000 |
|
|
|
|
|
TOTAL
|
5859.862 |
4628.950 |
3134.200 |
PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.03.2008 |
31.03.2007 |
31.03.2006 |
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Sales Turnover |
30861.700 |
24507.800 |
26013.700 |
||
|
Other Income |
814.500 |
1697.400 |
0.000 |
||
|
Total Income |
31676.200 |
26205.200 |
26013.700 |
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|
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||
|
Profit/(Loss) Before Tax |
3072.200 |
2225.100 |
913.900 |
||
|
Provision for Taxation |
988.500 |
364.300 |
209.000 |
||
|
Profit/(Loss) After Tax |
2083.700 |
1860.800 |
704.900 |
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Export Value |
NA |
NA |
NA |
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Imports : |
|
|
|
||
|
|
Raw Materials |
218.885 |
197.345 |
NA |
|
|
|
Finished Goods |
4046.355 |
2002.065 |
NA |
|
|
|
Stores & Spares |
592.749 |
536.329 |
NA |
|
|
|
Capital Goods |
36.954 |
2.615 |
NA |
|
|
Total Imports |
4894.943 |
2738.354 |
NA |
||
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|
Expenditures : |
|
|
|
||
|
|
Manufacturing Expenses |
108.800 |
79.100 |
|
|
|
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Administrative Expenses |
1708.800 |
1344.900 |
|
|
|
|
Raw Material Consumed |
22350.900 |
18107.700 |
|
|
|
|
Excise Duty |
416.400 |
502.300 |
|
|
|
|
Employees Cost |
2758.900 |
2425.700 |
25099.800 |
|
|
|
Interest |
59.600 |
73.300 |
|
|
|
|
Insurance Expenses |
1037.100 |
1293.400 |
|
|
|
|
Power & Fuel |
27.900 |
30.500 |
|
|
|
|
Depreciation & Amortization |
135.600 |
123.200 |
|
|
|
Total Expenditure |
28604.000 |
23980.100 |
25099.800 |
||
QUARTERLY RESULTS
|
PARTICULARS |
|
|
30.06.2008 (1st Quarter) |
|
Sales
Turnover |
|
|
10067.300 |
|
Other
Income |
|
|
521.000 |
|
Total
Income |
|
|
10588.300 |
|
Total
Expenditure |
|
|
9291.200 |
|
Operating
Profit |
|
|
1297.100 |
|
Interest |
|
|
(5.400) |
|
Gross
Profit |
|
|
1302.500 |
|
Depreciation |
|
|
40.700 |
|
Tax |
|
|
402.000 |
|
Reported
PAT |
|
|
851.300 |
KEY RATIOS
|
PARTICULARS |
31.03.2008 |
31.03.2007 |
31.03.2006 |
|
Debt Equity Ratio |
0.14 |
0.25 |
0.41 |
|
Long Term Debt
Equity Ratio |
0.05 |
0.09 |
0.11 |
|
Current Ratio |
1.04 |
1.05 |
1.05 |
|
TURNOVER RATIOS |
|
|
|
|
Fixed Assets |
12.30 |
9.64 |
7.45 |
|
Inventory |
1.19 |
1.48 |
2.12 |
|
Debtors |
6.39 |
5.90 |
5.02 |
|
Interest Cover
Ratio |
52.55 |
22.04 |
26.63 |
|
Operating Profit
Margin (%) |
10.59 |
7.09 |
7.01 |
|
Profit Before
Interest and Tax Margin (%) |
10.15 |
6.59 |
6.43 |
|
Cash Profit Margin
(%) |
7.19 |
5.79 |
5.33 |
|
Adjusted Net
Profit Margin (%) |
6.75 |
5.29 |
4.75 |
|
Return on Capital
Employed (%) |
59.72 |
41.62 |
39.94 |
|
Return on Net
Worth (%) |
45.34 |
41.67 |
41.56 |
LOCAL AGENCY FURTHER INFORMATION
HISTORY:
Subject a premier air-conditioning company has established a
strong leadership in India. It is also the provider of engineering and back-up
services. The business segments of the Company are, Electro-mechanical projects
and services, engineering products and services, Unitary Cooling products for
comfort and commercial use.
Subject was promoted by Tata Sons and Volkart Brothers, a Swiss firm in the
year 1954. Its products include Room Air conditioner, Refrigeration Equipment,
Water Coolers, Forklift Trucks, Cranes, Pumps and Modular Office Furniture
Systems. The Company's sourcing and marketing operations cover Textile
Machinery, Machine Tools, Mining and Construction Equipment, and Industrial
Chemicals.
The Indian subsidiaries of the company are Simto Investment Company Limited and
Auto Aircon (India) Limited, and the foreign subsidiaries are Metrovol FZE
(UAE), VIL Overseas Enterprises B.V. (The Netherlands), Voice Antilles N.V.
(Netherlands Antilles) and Weathermaker Limited.
In its pursuit of latest world-class technologies, Company has entered into
numerous international tie-ups with Hitachi for absorption machines and
chillers, Standard Refrigeration for direct expansion chillers and Dunham Bush
for screw chillers, sulzer for pumps, Lista for office furniture. It also has
joint ventures with Fanuc Limited (Japan), General Electric (USA), Air
International Group (Australia) Sermo Montaigu (France) and Fedders Group
(USA).
In 1998-99, Company undertook a restructuring program, and sold its white goods
business to Electrolux and transferred its chemicals plant at Patancheru to
Ralchem, a subsidiary of Rallis India. The company also sold the thermostat
division to UK-based multinational and divested its stakes in a couple of
loss-making subsidiaries. Voltas plans to exit from two of its associate
companies , Voltas-Air International, a 50:50 venture with the Air
International Group of Australia for car air-conditioners and Voltas
Switchgear, a loss-making subsidiary.
Voltas International Limited a wholly owned subsidiary comapany merged with the
company with effective from April 1, 2001. In the year 2001, the company has
entered into a Joint Venture agreement with Fedders International Inc., USA and
formed Universal Comfort Products Private Limited for the manufacture of a wide
range of room air conditioners and other cooling products in India.
In the same year, Voltas Switchgear Limited (VSGL) ceased to be a subsidiary of
the company, consequent upon transfer of the company's 74% shareholding in VSGL
to Precious Trading & Investments Limited Also in the same year, the
company has incresed production capcity of Refrigerators by 100000 nos to
400000 nos.
Virat and VSL, wholly-owned subsidiaries of the company were analagated with
the company from April 1, 2002. In July 2002, the company entered into a JV
agreement with Sermo Montaigu of France and formed a JV, Sermo-PM India Limited
Voltas-Air International Company (VAIL) was a joint venture company between
Voltas and Air International, Australia, became subsidiary of the company
effective December 5, 2002.
The company has increased the production capacity of Refrigerators &
Commercial Refrigeration from 400000 nos to 506000 nos. and for Water coolers
to 24000 nos from 8000 nos. Also they installed Air conditioners for
Specialised Applications having an capacity of 3300 nos. in the same
year.
During 2004, the company made alliance with Al Hashar Group, a leading business
house in the Middle East, for the distribution of Coolling Appliances of Voltas
in Oman. The company has increased the production capacity of Air conditioners
and water coolers have increased from 527300 nos to 630000 nos. In the year
2004-05, Simtools, an associate company has become a subsidiary of the Company.
In the year 2005-06, WML has become a wholly owned subsidiary of the Company.
The company has increased the production capacity of Packaged Air conditioners
from 10050 nos to 11050 nos.
In the year 2006-07, two new plants at Pantnagar in Uttarakhand for central air
conditioning equipment and commercial cooling products were commissioned. UCPL,
a joint venture company is in the process of establishing a new manufacturing
facility with annual capacity of 300000 units at Pantnagar in Uttarakhand,
which is expected to become operational in 2007-08. The company has increased
the production capacity Packed Air conditioners by 5000 nos., and Package
Chillers by 280 nos. Also they installed Vapour Absorption Machine and Terrain
Cranes Crusher with the production capacity of 35 nos and 10 nos
respectively.
DIVIDEND
The Company's dividend policy is based on the need to balance the twin
objectives of appropriately rewarding the shareholders with cash dividend and
of conserving resources to meet the Company's needs. The Directors recommend a
dividend of 135% for the year 2007-08 (2006-07:100%).
OPERATIONS
The turnover of the Company has increased by 26% over the previous
year to Rs.30860.000 Millions, mainly contributed by Electro-mechanical
Projects and Unitary Products Business.
There has been a significant improvement in the profitability of the Company
during the year, with an increase of 102% over the previous year in Profit
before Financial Items and Depreciation (EBITDA) to Rs.2830.000 Millions against
Rs.1400.000 Millions for the year 2006-07. EBITDA margins which were at 5.7% in
the previous year, rose to 9.2%.
The Profit before Exceptional items and Taxation (PBT) for the year 2007-08 stood
at Rs.2780.000 Millions. The PBT for 2006-07 was Rs.1550.000 Millions which
included a one-time equity dividend of Rs.120.000 Millions from Simto
Investment Company Limited, a subsidiary company, arising from the large profit
it earned from sale of one of its investments and interest income of Rs.40.000
Millions on tax refund. If these items are excluded, the PBT of 2006-07 works
out to Rs.1390.000 Millions. The growth in PBT of 2007-08 in thus 100%.
The Company achieved an operating EPS of Rs.5.74 per share of Re.1 face value
against Rs.3.13 per share, in the previous year, an increase of 83%.
The Engineering businesses witnessed slow down during the year. Rupee
appreciation against US Dollar and higher interest rates impacted the capital
investments in Textiles and Auto/Auto ancillary sectors which adversely
affected the Textile Machinery and Machine Tool businesses. Substantial growth
in the Materials Handling Business, and in particular, in Forklift market
attracted a number of international players in the high-end and low-end sectors
resulting in increased competition and an impact on the profitability of this
business. However, Mining and Construction business continued to remain
buoyant. Electromechanical Projects Business, performed well, both in the
international and domestic markets and contributed to much higher turnover and
profitability. Even more encouraging was the order booking of Rs.37360.000
Millions and the carry forward order book position as on 31st March, 2008 was
Rs.43000.000 Millions for this segment, an increase of 79% as compared to
Rs.24000.000 Millions per end 31st March, 2007. This augurs well for the
future.
Most heartening was the performance of Unitary Products Business Group. The
closure of Hyderabad facility, introduction of star rated energy efficient
products, commencement of a factory for Commercial Coolers in the Excise free
zone in Pantnagar, rationalization of product pricing and Rupee appreciation,
all combined to give a substantial jump in EBIT (Earnings before interest and
tax) margins of this business to 6.58% from 1.82% achieved in the previous
year. The entire marketing team had devised a successful strategy for achieving
these creditable results, while increasing the market share to 16%. The
turnover of the business improved by 37% and volume growth exceeded 30%.
FINANCE:
The Company's liquidity position remained comfortable during the year.
Investments in Mutual Funds stood at Rs.2210.000 Millions per year-end. In
addition, cash and bank balances also stood at a comfortable level of
Rs.860.000 Millions. The amounts lying with Non-scheduled banks aggregating
Rs.1880.000 Millions represent balances held overseas against specific projects
which are not available for other purposes.
In view of the comfortable liquidity position, the Company was not impacted by
the volatility of interest rates in the economy and tightening of
liquidity.
Net working capital requirements of the Company went up during the year 2007-08
in line with the expansion in various businesses. However, excluding cash and
bank balances, the net working capital has actually dropped from Rs.260.000
Millions to a negative Rs.840.000 Millions which indicates prudent resource
management across the businesses. Improved IT systems have helped control the
working capital significantly.
Despite Rupee appreciation against US Dollar, the Company's net foreign
currency exposure was minimal and was therefore not much impacted by the
fluctuations in the exchange rates. The Company has no exposure to
derivatives.
TATA BUSINESS EXCELLENCE MODEL
(TBEM)
The Company's business excellence journey continues satisfactorily with key
focus on total employee involvement. In line with this, several new initiatives
such as 5S and Kaizen have been rolled out. Going forward, the Company proposes
to undertake comprehensive process improvements as well as several other
initiatives which include Six Sigma, innovation and knowledge management. There
will also be emphasis on generating a more robust process for the employee
engagement across the organization.
The Tata Business Excellence Model (TBEM) provides a platform on which the
Company continued to strengthen its endeavours towards sustainable improvement
in business excellence. The Strategic Planning Process and Balanced Scorecard
(BSC) mechanisms proved their value in formulating strategic objectives and
goals and ensuring alignment across all the business units of the Company.
There has been good progress in TBEM deployment, as indicated by the outcome of
the internal/external assessments as a part of the TBEM assessment process, in
which certain Business Units of the Company participated. The feedback from
these assessments played a vital role in providing useful inputs to the
Business Units on areas of improvement. The Company has an adequate number of
trained internal assessors to carry out the assessment process
effectively.
IT INITIATIVES:
The strategic outsourcing of the IT function to a specialized consultant has yielded good results in operational areas, with an improvement in Service Level Agreement (SLA) parameters.
New IT projects of strategic importance were implemented during the year under
review. These include CRM for Unitary Products Business, Business Intelligence
for service operations of Textile Machinery Business, SAP/ HR and Payroll,
project systems for Electro-mechanical and Refrigeration Business and BSC for
Corporate. These will be operationalized during the current year.
Hosting of a new Data Centre, with state-of-the-art hardware to cater to the
increased number of SAP users, was carried out successfully in the premises of
a Group Company in Mumbai. This will be of value in yielding better uptime and
processing speed for the ever-increasing demands of businesses.
COMMUNITY DEVELOPMENT AND ENVIRONMENTAL PROTECTION:
There was a significant degree of enhancement in volunteering activity among Voltas employees, serving numerous identified causes by donating their time and talents. For the Akanksha mentoring programme, now in its 7th year, several consultative meetings were held with a view to improving the mentoring process and outcomes. A Leadership Programme was conducted for the mentally and physically challenged children of the ANZA Special School, which was highly appreciated by the parents. The children of Lady's Home, an orphanage for boys, were given special coaching classes in mathematics, ensuring good results in the SSC examinations. At Ma Niketan, an orphanage for girls, Voltas continued its efforts in cultivating 1.5 acres of land to grow vegetables towards self-sufficiency at home. Voltas spearheaded the training of key volunteers for Tata Council for Community Initiatives (TCCI), Mumbai Region.
In its Core Competency Project, which Voltas partners with Joseph Cardijn
Technical School in Mumbai to impart hands-on technical education to the
underprivileged and those not academically inclined, the 12th batch of
successful students graduated. Company also conducted a special batch in 2007
for the youth of Assam in which 10 students completed the course successfully
and were awarded certificates. Soft skills training was introduced in
personality development, smart thinking and customer care. An appreciation
letter was received from the Government of Assam.
The Voltas Organisation of Women (VOW), exclusively run by lady employees and
the wives of male employees, continued to reach out to the underprivileged by
way of educational and medical relief. Two new projects were taken up, the
Brihaspati Academy at Pantnagar and vocational training at Regina Pacis in
Mumbai, with focus on the upliftment of tribal women.
The Company also extended financial support in the form of donations and
contributions to institutions, including the TCCI, VOW, Leslie Sawhny
Endowment, Cancer Patients Aid Association, Yusuf Meherally Centre, Lady's Home
for Boys and Bombay Environmental Action Group.
GLOBAL COMPACT:
The Company had earlier signed the Global Compact with United Nations. The Compact lays down ten key principles based on universally agreed and internationally applicable values and goals in the areas of Human Rights, Labour Standards and Environment. Workshops were conducted to enhance the awareness regarding Global Compact among the employees.
SUBSIDIARIES AND JOINT VENTURES:
Pursuant to the Accounting Standard AS-21 issued by the Institute of Chartered
Accountants of India, Consolidated Financial Statements presented by the
Company include the financial information of its subsidiary companies, namely,
Metrovol FZE (Metrovol), VIL Overseas Enterprises B.V. (VOEBV), Voice Antilles
N.V. (VANV), Simto Investment Company Limited (Simto), Auto Aircon (India)
Limited (Auto Aircon) and Simtools Limited (Simtools). In terms of the approval
granted by the Central Government under Section 212(8) of the Companies Act,
1956, a copy of the Balance Sheet, Profit and Loss Account, Directors' Report,
Auditors' Report and other documents of the aforesaid subsidiary companies for
the year ended 31st March, 2008, have not been attached to the Balance Sheet of
the Company. However, the Annual Accounts of these subsidiary companies are
open for inspection by any member/investor and the Company will make available
these documents/details upon request by any member of the Company or its
subsidiaries interested in obtaining the same.
Metrovol and VOEBV had reported higher turnover/ income as compared to the previous year and Metrovol, VOEBV and VANV (foreign subsidiaries) have also paid/ declared dividends.
Universal Comfort Products Private Limited (UCPL), a joint venture company
between Voltas and Fedders is engaged in the business of manufacturing air
conditioners and has its plants at Dadra and Pantnagar in Uttarakhand. The
existing paid-up capital of UCPL of Rs.276.420 Millions is held in equal
proportion of Rs.138.210 Millions each, by Voltas and Fedders. Fedders have
agreed to divest and offered their entire shareholding in UCPL to Company for a
consideration upto Rs.75.000 Millions (including refund of share application
money), subject to requisite approvals/clearances in that behalf. Upon transfer
of shares, UCPL would cease to be a joint venture company and become a wholly
owned subsidiary of the Company. In view of substantial volume growth in
Unitary Products business and the cost increases in imported products, UCPL is
expected to be a significant source of procurement for the Company.
Saudi Ensas Company for Engineering Services WLL (Saudi Ensas), a joint venture
company incorporated in Jeddah, Kingdom of Saudi Arabia (KSA), has a paid-up
capital of SR 2.600 million. The Company along with its subsidiary holds 49% of
the capital and the balance 51 % is held by the local partner. Saudi Ensas is
engaged in the execution and operations/maintenance of electro-mechanical
installations in KSA and has for the past few years incurred losses and its
liabilities are in excess of its assets. As part of rehabilitation/ financial
restructuring, the local partner has agreed to transfer its entire 51%
shareholding in Saudi Ensas to Voltas for 'Nil' consideration. The transfer of
shares is subject to statutory approvals and legal process in KSA and India.
Upon completion of the legal process, Saudi Ensas would cease to be a joint
venture company and become a wholly owned subsidiary of the Company. KSA
provides good opportunity to the Company's international Electro-mechanical
business and with full ownership of Saudi Enas, the Company would be able to
leverage its market reputation to gain a reasonable share of these
opportunities in the coming years.
MANAGEMENT
DISCUSSION AND ANALYSIS:
OVERVIEW:
The Company continued its journey on the path of accelerated
growth and consolidated the foundation for sustained growth.
The Company's primary focus during the year was in
synchronizing, enhancing and broadening its offerings of services, projects and
products for better conformity with the needs of emerging markets and growth
opportunities, both in India and overseas and evolving new value propositions
in these areas.
The business segments of the Company are:
- Electro-mechanical Projects and Services
- Engineering Products and Services
- Unitary Cooling Products for Comfort and Commercial Use
- Others
ELECTRO-MECHANICAL PROJECTS
AND SERVICES:
The ongoing economic buoyancy in geographies where the Company operates has
offered opportunities for rapid growth of integrated engineering services. In
order to cater to these, the domestic Air Conditioning and Refrigeration business
underwent a migration from HVAC to MEP business. This migration reflects wider
scope of the services being offered, encompassing Mechanical, Electrical and
Public Health (MEP), of which Heating, Ventilation and Air conditioning (HVAC)
are a sub-category. Accordingly, the new business also received its ISO
9001:2000 certification for its 'Electro-mechanical and Refrigeration Projects;
confirming the robustness of its projects.
A major achievement in the domestic MEP business was the completion of the new
Rajiv Gandhi International Airport in Hyderabad. The expanded MEP offering has
also resulted in the booking of several other high-value projects, including
Fortis Healthcare, Neptune Mall and others. To address the needs of the growing
industrial segment with its heavy investments in metals, power and airports,
the Company has created a focussed group offering innovative solutions in
MEP.
There has also been a noteworthy achievement of substantial domestic order book
growth of 56% over the previous year. This has been accomplished by seizing
opportunities resulting from sizeable investments made in IT/ITeS,
entertainment, hospitality, healthcare, airports and other service segments.
The Company's revenue from domestic Electro-mechanical and Refrigeration
business (EM&R) grew at 29% and profitability improved due to initiatives
such as centralized material procurement and effective project management
capabilities. The Company has taken several steps to tap the market opportunities
and made investments in its manufacturing facilities at Thane, Dadra and
Pantnagar, for increasing capacity and reducing delivery lead-time.
The market has become highly competitive in the MEP domain, with a large number
of players of international stature competing in the domestic market. This
could lead to pressure on margins. To avert this outcome, the Company has
re-modeled its organizational structure, with a focus on contract management
and strong design support to meet the requirements of various applications. A
large number of engineers and support staff have undergone the Project
Management Professional Training program to better understand and implement the
best practices and techniques in project management.
The Company's continued focus on Variable Refrigerant Flow systems (VRF) has
resulted in a growth rate of 64% over the previous year, testifying to a
promising future for this segment. Indoor Air Quality (IAQ) is receiving
serious attention in the domestic HVAC arena. The Company has been providing
solutions for better indoor environment through many avenues, resulting in
order book growth in this segment of more than 250%.
There is growing awareness of the need for reform in the agricultural sector to
minimize wastage. With its inherent capability to address these requirements,
the Company has set up a Cold Chain and Food Processing group to serve the
needs of this growing segment. This has resulted in the booking of large orders
through the Agro Boards of various States. The group's competencies include
total solutions at both the front and back ends, including the retail stage of
the supply chain.
The Company continued with its thrust on project exports in overseas markets
and retained its position as one of the key players in select Middle East
geographies, viz. UAE, Qatar and Bahrain, in which it has significant
operations. The international Electro-mechanical business secured orders for
several very large and prestigious contracts, mainly in Qatar and UAE. This has
enabled the Company to end the year with a healthy position in terms of orders
on hand, close to Rs.38000.000 Millions. The notable large value contracts
include: Sidra Medical and Research Centre (Qatar), Barwa City Project (Qatar),
District Cooling Plant at DIFC (Dubai), Ferrari Experience Project (Abu Dhabi)
and Formula 1 Racing Track related development (Abu Dhabi). The Company has
secured new projects in Singapore and Mauritius and expects to further
concentrate its efforts there and leverage its presence.
Two of the major overseas contracts - Burj Tower (Dubai) and Bahrain City
Centre (Bahrain) - are progressing well and are expected to achieve agreed
milestones. During the year, the Company completed various works, including the
Intercontinental Hotel refurbishment in Abu Dhabi, the Wafi Hotel and Mall
project in Dubai and the Interim Doha Convention Centre in Qatar. The Changi
Water Reclamation Plant project in Singapore has been commissioned and is fully
functional after completion of the additional proving period.
ENGINEERING PRODUCTS
AND SERVICES:
Demand was strong for mining equipment, driven by investments in the expansion
of mining capacity in coal, steel, limestone, cement and other minerals,
including zinc and bauxite. This yielded large volumes of business for
equipment like mining excavators, dump trucks, crushing and screening plants.
The Company's Mining and Construction Equipment business achieved satisfactory
sales of these products to mining customers, accompanied by value-added services
such as extended maintenance contracts.
The construction sector also showed strong growth, powered by investments in
real estate and other construction projects such as roads, power plants,
industrial plants, irrigation and water supply schemes, ports, airports and
others. There was buoyant demand for construction equipment such as cranes,
crushing and screening plants and concrete equipment. The Company successfully
capitalized on these opportunities to retain its market share in track mounted
crushing and screening plants and increased its presence in the wheeled/static
plant segments through sale of many machines manufactured locally at Thane
Works. It also made a breakthrough in the sale of concrete pavers and tower
cranes in the Indian market.
In both mining and construction equipment sectors, the Company faced severe
competition from locally manufactured products. Many multinationals such as
Hyundai, Doosan and Volvo increased their domestic presence by setting up their
own manufacturing and other operations to tap the Indian market.
The Company's Materials Handling business managed to increase its overall sales
of forklifts and cranes by around 12% and retained its market share despite
increased competition. However, the margins have been under pressure due to
increased competition and lack of anticipated growth in volumes. The Company
was also successful in penetrating the market to increase sales of TCM
forklifts imported from Japan, which offer higher quality and the latest
technical features. Sales of warehousing equipment were reasonably strong due
to investments in retail and logistics. The Company launched its own brand of
stackers in the market and has initiated development/manufacture of other
products such as pallet trucks.
The Company's Textiles Machinery business achieved growth of around 20% in
Sales. This was achieved in an adverse climate marked by a sharp decline in
machinery investment since the last quarter of financial year 2006-07. However,
due to orders already in hand, the billings from dispatches were along expected
lines.
The Company's Machine Tools business suffered a decline in performance in
comparison with the previous year. This is primarily because the automotive
sector has sharply cut back on machine tool purchases, resulting from the
slowdown in major expansion in this sector.
UNITARY COOLING PRODUCTS FOR
COMFORT AND COMMERCIAL USE:
The Indian room air conditioner industry grew by 28%, reflecting the strong
growth of the economy and the changing perceptions of consumers, who
increasingly see air conditioners as a necessity rather than a luxury. Within
the category, Split air conditioners grew by 45% while Window air conditioners
grew by 17%.
The Company was amongst the pioneers in popularizing energy-efficient air
conditioners in India, with its Save Karo India campaign acknowledged as being
effective in stimulating the market and creating a major differentiation for
the Voltas Vertis brand. Though priced marginally higher, these
energy-efficient air conditioners found ready market acceptance because they
consume less electricity and thereby, save on running costs for
consumers.
The Company's Unitary Products business achieved a 41% increase in its sales
volume of room air conditioners, resulting in an increase in its market share
from 15% to 16%. Split air conditioners showed remarkable growth of 55%,
thereby improving the product-mix as well as the overall profitability of the
business.
The sales performance of the room air conditioner business
is summarized below:
|
Category |
Industry Sales (Nos.) |
Company Sales (Nos.) |
Company Share |
|||||
|
|
2007-08 |
2006-07 |
Growth |
2007-08 |
2006-07 |
Growth |
2007-08 |
2006-07 |
|
|
|
|
|
|
|
|
|
|
|
WRAC |
1125000 |
960000 |
17% |
144000 |
115000 |
25% |
13% |
12% |
|
SAC |
925000 |
640000 |
45% |
189000 |
122000 |
55% |
20% |
19% |
|
|
|
|
|
|
|
|
|
|
|
Total |
2050000 |
1600000 |
28% |
333000 |
237000 |
41% |
16% |
15% |
WRAC: Window Room Air Conditioner; SAC: Split Air Conditioner
Source: Company estimates
In the refrigeration products business, the state-of the-art
factory at Pantnagar - set up in a record 8 months - is now fully operational.
The plant achieved the milestone of crossing one lakh units in March 2008.
Water Coolers produced at the factory registered a growth of 23%, while the
Chest Freezer segment - part of the Commercial Refrigeration range - grew by
15%. The business also sustained its leadership position in Water Dispensers,
with sales growing by a robust 30%.
OTHER BUSINESSES:
The Company's Chemicals Trading business benefited from several opportunities
during the year under review. All major agency lines like Aqualon, Hercules,
Huntsman Tioxide and OCI Corporation, Korea performed well. With the economic
boom and growth in consumer industries, the Company saw good growth in
chemicals supplied to the personal care, paint, construction chemicals and
plastics industries.
OPPORTUNITIES AND OUTLOOK:
ELECTRO-MECHANICAL PROJECTS AND SERVICES:
In the domestic market, the concept of MEP has been well
received by consultants and customers. In future, it is likely that in many
projects, services such as electrical, fire detection and protection,
Integrated Building Management Systems, Public Health Engineering and other
specializations will be outsourced to a single agency. The projects could also
include provision for facilities such as District Cooling and BOOT solutions
particularly, in SEZs and large commercial complexes. In addition, the Government's
renewed focus on National infrastructure development, especially in the area of
upgradation and modernization of airports, establishment of SEZ and medical
tourism, will lead to tremendous scope for expansion in this business. These
offer an opportunity to demonstrate the engineering capabilities of the Company
and move up the value chain. The Company is gearing up to handle these
challenges with changes in organization structure and investments in Design
Centre and training.
Development of Cold chain is becoming an imperative to deal with worldwide food
shortage and price increases arising from global warming, increase in
consumption pattern and populations and depletion of arable areas. It is
expected that this area will receive increased attention from the Government
and international development bodies. The Government has already initiated a
large number of schemes to attract investments in the food sector largely
towards automation of processes; hence the requirement for food processing as a
distinct line of business. The Company has taken initiatives to provide
integrated solutions for meeting cold storage and food processing industry
needs.
In the Company's international Electro-mechanical business, the focus markets
of UAE, Qatar and Bahrain show evidence of sustainability, arising from
significant economic growth. UAE and Qatar, in particular, being major oil
producing and exporting countries, are riding on the high level of oil prices
and surpluses generated, that are being largely ploughed back into
developmental projects related to social and physical infrastructure. The spurt
in construction of high-end development projects, malls, hotels, airports,
hospitals and district cooling facilities offers considerable opportunities for
the Company to grow its business and strengthen its presence.
The Company is constantly reviewing the geographies in which it operates to
ensure that the business is not exposed to regional/country concentration. It
is also exploring other markets for expanding its revenues. The Company is
presently restructuring and consolidating its current market activities in
Saudi Arabia, where the opportunities appear to be sustainable and sizeable.
Saudi Arabia is expected to grow into a key market for the business in coming
years. The Company's Joint Venture in Saudi Arabia is likely to be converted
into a wholly-owned subsidiary during the early part of financial year
2008-09.
Overall, the Middle East, mainly the GCC States in which the Company is already
active, remains buoyant. The climate is conducive for the Company to seize the
opportunity and take action towards long-term profitable growth.
ENGINEERING PRODUCTS AND
SERVICES:
The textile industry is undergoing severe pressure on its margins, affecting the
bottom line of many textile mills. The adverse factors are exchange rates,
interest rates and the worsening power situation in many textile-producing
states. The cost of production has gone up substantially in almost all textile
mills and cannot be absorbed in the selling price of the final products;
consequently, the mills are deferring investments in modernization and creation
of new capacities. This situation is likely to continue for the next couple of
years. Nevertheless, the Company's Textile Machinery business has geared itself
to tap the existing market by offering better services and additional machines
in the post-spinning area, which is likely to help in sustaining the Company's
position despite adverse market conditions.
To mitigate the risk of slowdown in one of the business under this segment, as
is presently under way in the automotive sector, the operations of the
Company's Machine Tools business are being reorganized into four main
operational groups. This change will help better focus on the market and the
capability to comprehensively address business imperatives right from talent
acquisition up to delivery of goods. A specialized Design Center at Pune was
inaugurated for application engineering in which the customer can participate. The
financial year 2008-09 is expected to be significantly better owing to the
re-orientation and sharpened focus.
The prospects for the Company's Mining and Construction Equipment business are
strong, as the Government is committed to sustained development of the
infrastructure sector, with a huge investment of over Rs.16 trillion planned
over the next 10 years. The industry is expected to grow at 25% to 30% per
annum over the next few years, offering opportunities in a variety of equipment
categories.
In the Company's Materials Handling business, more robust prospects are awaited
in industrial sectors, with the expectation of investments in manufacturing
capacities. Many projects are likely to come up in automobiles, engineering,
steel, petrochemicals, retail and other areas, offering good prospects for
various types of materials handling and warehousing equipment.
UNITARY COOLING
PRODUCTS FOR COMFORT AND COMMERCIAL USE:
The market for air conditioners is expected to continue growing at over 20% in
volume and the product mix is likely to shift in favour of splits over window
air conditioners.
Encouraged by the widespread consumer acceptance of energy-efficient air
conditioners largely due to lower operating costs, the Company is broadening
its offerings and consolidating its lead in this segment. It has introduced a
new range of air conditioners for the premium customer segment and is taking
steps to tie up with organized retail channels that provide a new shopping
format and experience to customers. The Company is also expanding its
distribution to smaller towns and semi-urban areas, to tap growing disposable
incomes. With all these measures, the Company expects to maintain a high rate
of growth.
In the Commercial Refrigeration segment, the absence of dominant MNCs provides
an opportunity to sustain the Company's leadership position. Though the growth
rate in this category of products - freezers, bottle coolers, and water coolers
- is only around 10% per annum, the Company is exploring other growth
opportunities in this category.
THREATS:
ELECTRO-MECHANICAL PROJECTS AND SERVICES:
The management of human resources is the primary challenge
facing the electro-mechanical business, both domestic and international. The
boom in the Middle East coupled with the rapid growth in the domestic market
has compounded the need for hiring fresh talent and mobilizing them in large
numbers. Retention of human resources is also threatened by inducements from
competitors and from clients and consultants. To address this situation, apart
from regular salary reviews, greater focus is being given to empowerment of
staff. A facility has also been created to train new entrants continuously as a
buffer for growing demands. The available talent is upbeat on the new lines of
business and committed to moving for faster growth, as well as motivated to
take on bigger challenges. The Company is working in tandem with several
vocational training institutes to impart relevant training and exposure to
fresh students, making them ready for the scope, complexities and standards of
Projects.
The severe workforce shortage is felt across all levels in the industry,
including consultants, customers and project management companies, leading to a
situation of time overruns and cost escalations beyond the Company's control.
This could impact revenues and profitability. The Company has mobilized its HR
function to chalk out several measures to mitigate the difficulties and
challenges on this score. HR has been considerably restructured and reinforced
accordingly. There is a huge intensification of focus on talent acquisition,
apart from training and developmental intervention, employee engagement and
career planning.
HR initiatives taken by the Company include periodic benchmarking and review of
compensation packages for staff and continuous improvement of appraisal,
assessment, reward and recognition processes. Other initiatives to minimize the
on-site staff requirement have been through off-shoring of pre-bid work and
post-award Design and Engineering activity. A Global Engineering Centre at
Mumbai has been set up and is being ramped up to meet the requirement of
overseas offices and projects.
For overseas projects, the sourcing possibilities of talent from India have
been limited in the face of huge demand and the rise in domestic salary levels.
The Company has therefore diversified its reach to sources like Philippines,
Malaysia, Middle East and Europe depending upon the skill levels
required.
Risk identification and mitigation are ever-growing considerations in the MEP
business, since larger projects have extended completion time frames. The
Company has formulated a structured risk assessment process through competent
consultants. There is also considerable exchange of ideas in terms of knowledge
sharing from projects that have been completed. The entire spectrum from
pre-sale to handing over of project is evaluated against probable and potential
risks.
There is severe volatility in the metals market, particularly for steel, copper
and aluminium as well as PVC, with unpredictable forward movements causing
difficulty in factoring them for pricing purposes. The Company attempts to
negotiate with clients for a formula for compensating for the price escalations
arising from metal prices; but often this risk lies with the EPC contractor, as
the client insists on a firm and fixed price contract. The Company is exploring
the possibility of getting new orders on a Cost Plus basis so that to a large extent
the cost-over runs are covered.
The MEP business also has to contend with currency fluctuations. This is
causing multiple challenges in terms of (a) weakening of Middle East currencies
caused by the decline in US Dollar, vis-a-vis the Euro, Pound Sterling and even
Indian Rupee (b) uncertainty with regard to cost of third-country purchases (c)
loss in translation when reporting the performance of overseas projects in
Indian rupees (d) erosion of net realisation from remittances to India by
employees in the Middle East due to the rupee's appreciation, causing workforce
dissatisfaction.
The Company has been taking steps to minimize the effect of metal price
volatility and currency fluctuation through measures like reliable and
realistic forecasting, hedging and forward buying to the extent possible.
The domestic market is dominated by the presence of key international players,
a few of whom are setting up manufacturing facilities for greater
cost-effectiveness. These external factors have fuelled intense competition,
generating pressure on margins. To overcome this, the Company has initiated
cost-effective manufacturing operations, profit improvement plans, project
management capabilities and migration into the allied segments of cold chain
and food processing.
The boom in various construction activities and related business opportunities
in the Middle East is attracting newer established players from Europe, South
East Asia, Turkey and other regions, many of whom resort to aggressive pricing
to gain a foothold. Invariably, this results in destabilizing the pricing norms
and adds to the pressure on the Company's margins.
The unprecedented growth in project activity in the Middle East is also causing
a severe mismatch on the supply side; demand for products and services is
out-stripping supply, making EPC contractors vulnerable to the dictates of
vendors and subcontractors.
ENGINEERING PRODUCTS AND SERVICES:
In Mining and Construction Equipment business, the Company could face adverse
consequences due to loss of business/principals. This could be due to foreign
principals starting their own operations in the Indian market or going with
another partner for local operations. There could be added adverse impact due
to arise in steel prices and other input costs, resulting in a slowdown in the
industry and increased pressure on margins. There is also the threat of local
manufacturers of low-cost products which could result into a dip in the
Company's market share.
The major threat for the Materials Handling business is the strong rupee and
low customs duty, which has increased import of low-cost forklifts and other
materials handling equipment from China. The rise in input costs like steel and
lead would also put pressure on margins, since increased competition would
limit the Company's ability to increase product prices.
If the overall economic scenario witnesses slow down, the textile industry will
be impacted more severely.
UNITARY COOLING PRODUCTS FOR COMFORT AND
COMMERCIAL USE:
The Company's success in launching energy-efficient air conditioners has seen
most competitors flock to this platform as well, resulting in greater
competition. Moreover, new competition is emerging from large Chinese companies
setting up their base in India. The Room air conditioner category is therefore
one of the most competitive, with leading multinationals as well as Indian
companies competing for their share of this emerging market.
A major challenge is the steep inflation rate. There has been an unprecedented
spurt in global prices of metals like copper and steel - major raw material
constituents of air conditioners and commercial refrigeration products. The
tight labour market is also causing an annual increase in salaries of about
15%, thereby increasing the cost pressure. Manufacturing costs are therefore
going up substantially and the cost increase has more than offset the slight
reduction in the excise duty from 16% to 14%.
The combination of greater competition and sharp increase in input costs is
therefore putting pressure on margins in the air conditioning and refrigeration
industry, thereby offsetting the positive effect of strong growth in sales
volumes.
COMPANY’S PHILOSOPHY
ON CODE OF GOVERNANCE:
Good Corporate Governance is an integral part of the
Company’s Management and business philosophy. The Company subscribes fully to
the principles and spirit of good Corporate Governance and embeds the
principles of independence, integrity, accountability and transparency into the
value system driving the Company.
The Board of Directors exercise their fiduciary
responsibilities towards all stakeholders by ensuring transparency and
independence in the decision making process. The Company has adopted the Tata
Business Excellence Model as a means of driving excellence and the Balanced
Scorecard methodology for tracking progress on long term strategic goals. The
Company has also adopted the Tata Code of Conduct which serves as a guide to
each employee including the Managing Director, on the standards of values,
ethics and business principles. The Whistle Blower Policy of the Company
provides a mechanism for the employees to approach the Chairman of Board Audit
Committee/Ethics Counsellor and disclose information that may evidence
unethical or improper activity concerning the Company.
FIXED ASSETS:
- Leasehold Land
- Freehold Land
- Building
- Plant and Machinery
- Furniture and Fittings
- Vehicles
WEBSITE DETAILS:
PROFILE:
India's
premier air conditioning and engineering services provider
Company offers engineering solutions for a wide spectrum of
industries in areas such as heating, ventilation and air conditioning,
refrigeration, electro-mechanical projects, textile machinery, machine tools,
mining and construction equipment, materials handling, water management,
building management systems, indoor air quality and chemicals.
The Company's strengths lie principally in the:
- Design and manufacture of industrial equipment
- Management and execution of air conditioning and public works
projects
- Sourcing, installation and servicing of technology-based systems
- Representation of global technology leaders, serving diverse
industrial sectors and applications.
Operations
Company’s operations have been organized into four
independent business-specific clusters. Each of these has its own facilities
for market coverage and service to customers.
Electro-Mechanical
Projects & Services
- Electrical, Mechanical, HVAC & Refrigeration Solutions
- Electrical, Mechanical & HVAC Solutions (International)
- Water Management & Treatment
Engineering
products & Services
- Textile Machinery
- Mining & Construction Equipment
- Machine Tools
- Materials Handling Solutions
Unitary
Cooling Products for
- Comfort & Commercial Use
- Cooling Appliances
- Commercial Refrigeration
Others
- Chemicals Trading
Manufacturing
Company’s possesses total capability in the manufacture of
room/split air conditioners, industrial air conditioning and refrigeration equipment,
water coolers, commercial refrigerators, visicoolers, freezers and fork-lift
trucks. All these products bear the stamp of state-of-the-art automated
manufacturing plants resulting in consistently high quality and reduced costs.
Furthermore, the Company is partnered with Fedders
International Inc. of USA for 'manufacture only' alliances producing low cost,
high quality room air conditioners.
Projects
Over the years, Company has built up a substantial
reputation and is actively engaged in turnkey projects in fields such as
electro-mechanical works comprising electrical building services, HVAC,
plumbing, public Health, fire fighting, ELV and specialised systems; electrical
power projects; environmental and water pollution control; pumping stations and
water supply; water and waste water treatment projects. The Company has ISO
9001 - 2000 standards certification in this business, and has successfully
undertaken and executed project works in the Middle East, Far East and South
East Asia, CIS countries and Africa.
Marketing
Company’s sourcing and marketing operations cover air
conditioners, textile machinery, machine tools, mining and construction
equipment and industrial chemicals. In these sectors, the company demonstrates its
specialised engineering expertise, as well as its extensive network for global
sourcing.
NEWS:
Voltas
is now at the top of the list of 'India's most investor-friendly companies',
published every year by Business Today.
The ranking is based on numerous criteria pertaining to
policies and practices beneficial to investors, as well as overall performance
norms.
To summarise the qualifying requirements and the elimination
and judging process followed by Business Today:
ENTRY
QUALIFICATIONS
- Entry limited to companies listed on BSE and NSE, with market
capitalization exceeding Rs.2500.000 Millions on 30 June '08
- From these, further limited to companies with daily turnover
exceeding Rs.10.000 Millions on NSE & BSE combined
- Further limited to companies which outperformed the BT 50 index for
each of the last three years
- Eliminated companies whose shares were not traded on July 1, 2005;
or which listed after June 30, 2008.
JUDGING
PARAMETERS
35 marks out of 100 for return to investors. Measured by share
price appreciation over last 3 years (adjusted for rights/bonus issues). More
than 1000% return (total, not annualised) received the full 35 marks
65 marks out of 100 for investor care, measured by 4 norms:
- regular dividend distribution (full marks if average payment over
last 3 years exceeded 100%)
- timely disclosure of shareholder information (full marks for under
10-day gap between quarter ending and results declaration)
- low rate of investor complaints: zero marks if more than one
complaint per Rs 1 crore of public holding
- timely convening of AGM: full marks if within 60 days of financial
year ending
- Based on this rigorous scrutiny, Voltas is in the top five of their
ranking.
CMT REPORT
(Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts, India Prisons Service,
Interpol, etc.
1] INFORMATION ON
DESIGNATED PARTY
No exist designating subject or any of its beneficial owners,
controlling shareholders or senior officers as terrorist or terrorist
organization or whom notice had been received that all financial transactions
involving their assets have been blocked or convicted, found guilty or against whom
a judgement or order had been entered in a proceedings for violating
money-laundering, anti-corruption or bribery or international economic or
anti-terrorism sanction laws or whose assets were seized, blocked, frozen or
ordered forfeited for violation of money laundering or international
anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper
payments to government officials for engaging in prohibited transactions or
with designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject are
derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No
available information exist that suggest that subject or any of its principals
have been formally charged or convicted by a competent governmental authority
for any financial crime or under any formal investigation by a competent
government authority for any violation of anti-corruption laws or international
anti-money laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE
GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on
Corporate Governance to identify management and governance. These factors often
have been predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms
and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE
RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.43.38 |
|
UK Pound |
1 |
Rs.81.34 |
|
Euro |
1 |
Rs.64.55 |
SCORE & RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
7 |
|
PAID-UP CAPITAL |
1~10 |
8 |
|
OPERATING SCALE |
1~10 |
8 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
7 |
|
--PROFITABILIRY |
1~10 |
6 |
|
--LIQUIDITY |
1~10 |
7 |
|
--LEVERAGE |
1~10 |
6 |
|
--RESERVES |
1~10 |
8 |
|
--CREDIT LINES |
1~10 |
8 |
|
--MARGINS |
-5~5 |
- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
63 |
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a composite
of weighted scores obtained from each of the major sections of this report. The
assessed factors and their relative weights (as indicated through %) are as
follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
RATING
EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest capability
for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit
consideration. Capability to overcome financial difficulties seems comparatively
below average. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
|