1954 - The Company was Incorporated on 6th September at Mumbai. The Company was promoted in 1954 by M/s. Volkart Brothers and Tata Sons Pvt. Ltd., to take over the Engineering & Import Division of M/s. Volkart Brothers in India. - The Company's manufacturing activities were originally carried on at its factory at Chinchpokli, Mumbai and covered air-conditioning and refrigeration equipment mining, electrical and agricultural equipment. - The Company set up in Thane, Mumbai an up-to-date factory to manufacture wide range of air-conditioning and refrigeration and a range of mining equipments for which the Company had entered into a collaboration with leading manufacturers abroad. - The Company's distribution organisation is divided into two main groups - `Engineering' and `Marketing'. - The marketing group consists of two main divisions, one dealing in drugs, pharmaceuticals and consumer products and the other in chemicals and vitamins. The Company deals in foreign as well as indigenous products, besides marketing its own products. - The Company manufactures, sale and distribution of a variety

of products in the engineering, chemical and pharmaceutical industries such as agricultural, earthmoving, air-conditioning and refrigeration, textile machinery, machine tools, electrical and mechanical equipments as well as chemicals, pharmaceuticals and consumer products. 1956 - Shares sub-divided. 1,05,000 Rights shares then issued at par in prop. 7:10. 1963 - The Company promoted Scottish Indian Machine Tools Ltd., in Collaboration with Scottish Machine Tool Corporation of Glasgow for the manufacture of machine tools. 1964 - The Company concluded a collaboration agreement with Eaton Yale and Towns, U.S.A., for the manufacture of Yale fork-lift trucks. The Company has extensive domestic and international ties. - The Company joined the Mine Safety Appliances Co., U.S.A., and Associated Battery Makers (Eastern) Ltd., Calcutta in the promotion of Mine Safety Appliances Ltd., Calcutta, a joint venture for the manufacture of miners' electric safety cap lamps and other types of safety and protective equipment, appliances, detection and measuring devices.

1965 - 1,02,000 Rights Equity shares issued at a premium of Rs 25 per share in the proportion 2:5. 1966 - A new division, viz., the Agro-Industrial Products Division was added. The main operation of the division consisted of the sale and servicing of the tractors and implements made by the International Tractor Co. of India. This division handles hydraulic equipment ranging from larger pumping sets to small irrigation pumps, sprinkler irrigation systems and oil engines and also handles veterinary products, pesticides and fertilisers. - In Aug. 71,400 Bonus shares issued in prop. 1:5 and 4,500 shares issued (prem. Rs 75 per share) to Common wealth Development Finance Co. Ltd., U.K. 1970 - In April, 85,580 Bonus Equity shares issued in the proportion 1:5. 1972 - 1,03,896 Rights Equity shares issued for cash at a premium of Rs 50 per share in June. 1973 - Arrears as on 31.8.1974 - Rs 4935, Arrears as on 31.8.1976 - Rs 200 (Approximately). 1979 - With effect from 1st July, Tata-Merlin & Gerin Ltd. (TMG),

and the National Electrical Industries Ltd. (NEI), were amalgamated with the Company. In terms of the Scheme of Amalgamation, members of The National Electrical Industries Ltd., were allotted for every 30 preference shares of Rs 100 each held, 20 `B' class equity shares of Rs 10 each and 15-11% redeemable mortgage debentures of Rs 100 each of Voltas Ltd., and for every 240 No. of equity shares of Rs 10 each of NEI held, 20 `B' class equity shares of Rs 10 each and 9-11% redeemable mortgage debentures of Rs 100 each of Voltas Ltd. - Members of TMG were allotted for every 60 No. of equity shares of Rs 100 each held in TMG, 2 equity shares of Rs 100 each and 9-11% redeemable mortgage debentures of Rs. 100 each of Voltas Ltd. - 4,420 No. of equity shares of Rs 100 each and 19,892 - 11% (1987-91) were be allotted to the shareholders of Tata-Merlin & Gerin Ltd., and 14,117 `B' Equity shares of Rs 10 each and 9,605 - 11% (1987-91) redeemable mortgage debentures of Rs 100 each were allotted to the shareholders of The National Electrical Industries Ltd. The share were allotted in 1980-81.

1981 - The Company offered 5,00,000 - 13.5% secured convertible bonds of Rs 250 each at par. Out of this, 2,00,000 bonds were offered as rights to the existing shareholders and the balance 3,00,000 bonds issued to the public. Each bond carries an option to receive one equity share of Rs 100 each at par within three months after the expiry of three years from the date of allotment of bonds. The face value of each bond will be reduced by Rs 100 and the balance Rs 150 per bond will be repaid to the bondholders at the end of the 10th year from the date of allotment of the bonds. 1982 - The Company proposed to set up an electrical business unit at Pune. - The Company entered into an agreement with May & Christe of West Germany for the manufacture of dry type transformers of cast-resin design. - Voltas International Ltd., Perfect Moulds Ltd. Voltas Switchgear Ltd., Vizat Investment Co. Ltd., are subsidiaries of the Company. Nchovol F&E and Premium Granites Ltd. are subsidiaries of Voltas International Ltd. - The Company has distributorship rights in the following products: Drugs and pharmaceuticals by Merck Sharp & Dohme of India

Ltd., Mumbai, drugs and pharmaceuticals by Roche Products Ltd., Mumbai, air compressors by Kirloskar Pneumatic Co. Ltd., automatic looms by National Machinery Manufacturers Ltd., and shovels by Tata Engineering & Locomotive Co. Ltd. - The Air Pollution and Water Pollution project groups were amalgamated with the Electrical project group. 1983 - 1,91,708 No. of Equity shares issued on part conversion of 13.5% convertible bonds (91 shares issued during 1984/85). 1985 - 3,00,000 No. of equity shares issued on part conversion of 13.5% convertible bonds. 1987 - The Company accepted the condition laid down by LIC which holds Rs 50.09 lakhs of the debentures, that in the event of the Company making a public or rights issue of share capital during the period upto 31st October, 1987, the LIC should be given on one time basis the right to be allotted equity shares of a nominal value equivalent to 10% of its holdings of the debentures on terms and conditions on which such equity issue is made. 1988 - The material handling business group successfully introduced up-to-date warehousing equipment to further enlarge its

product range. The operations of machine tool division witnessed another successful year with the manufacturing capacity of all domestic principals being fully utilised. - Air-conditioning and refigeration business group received Government's approval for the technical collaboration agreement convering large-sized efficient compressors. - The machine tool division reached an agreement with Fanuc of Japan for technical collaboration to produce CNC drilling centres. 1989 - With effect from 1st March, Volrho Ltd. was amalgamated with the Company as per the order of BIFR. The Company issued 4,44,445 No. of equity shares of Rs 10 each to the erstwhile shareholders of Volrho Ltd.. 1990 - Approval was also received for extending Hitachi collaboration to the manufacture of absorption refrigeration machines. The materials handling business group proposed to extend its scope of activities to turn-key materials handling systems for mass production in engineering industries. - A new model window air-conditioner was launched by the appliances business group and it was proposed to add other consumer durables to the existing product range.

- The pharmaceutical and consumer products division suffered on account of diminished margins in the pharmaceutical line and inadequate range in the consumer products business. The distribution of Hostess brand of PEPSI snack foods commenced during the latter part of the year. The transformer operations were adversely affected by industrial relations problems at Pune. The Engineering projects division suffered a setback. - The machine tools division introduced Fanuc CNC drilling centres. 1991 - The performance of the industrial machinery division was adversely affected due to a lock-out at the Company's principal, Westerworks. - The appliances business division launched the ductable split air-conditioner, specifically needed for shops, showrooms and general office areas. The Agro-Industrial Product division proposed to take up shortly the manufacture of drip irrigation equipment. - The Agro-Industrial Product Division successfully tested to international standards, the indigenously built 36 KV SF6 breaker at CESI Test Laboratory, Milan, Italy. - An agreement was signed for updating technology and for the manufacture of new models of P&H hydraulic cranes. The machine tools division signed a four-year extension of its sole

selling agency agreement with Premier Automobiles Ltd. The performance of the chemicals division was adversely affected by import restrictions and high costs. The pharmaceuticals and consumer products division suffered a setback. 1992 - The Company restructured its operations into product group I comprising refrigerators, pharmaceuticals and consumer products and beverages while product group I(A) include textile machinery. Product group II consisted of machine tools, materials handling facility, industrial machinery, air-conditioning pumps and projects. Group III comprised of chemicals plant, chemicals division and agro-industrial products. - Air-conditioning and refrigeration business and agro-industrial products and pumps division suffered a setback due to prevailing recession in the market and non-availability of Government funds as well as disturbances from December. - The Agro industrial products and pumps division was bifurcated into two viz., pumps division and the farm and irrigation equipment operations division. - The Company entered into technical agreements with Sulzer Pumps, Switzerland for the former division and with Wade Manufacturing of USA for the latter division.

- The Engineering projects division was combined with the agro-industrial products division, to constitute a new division viz., pumps and projects division. - The Chemicals plant division introduced a new product Monocrotophos. The Electrical business group's operations suffered a setback on account of suspension of activities by virtue of lock out at the switchgear plant. Hence it is proposed to operate the said division through two separate wholly owned subsidiary companies Voltas Switchgear Ltd., and Voltas Transformers Ltd. - With effect from 1st January, Wandleside National Conductors Ltd. (WNC Ltd.), was amalgamated with the Company as per the order of BIFR. The Company allotted without payment in cost 13,314 No. of equity shares of Rs 10 each to the erstwhile shareholders of WNC Ltd., in the ratio of one equity share of Rs 10 of the Company for every three equity shares of Rs 100 each in WNC. - Effective from 1st January, Wandleside National Conductors Ltd. (WNC) was amalgamated with the Company. The erstwhile shareholders were allotted 13,314 No. of equity shares of Rs.10 each. This was as per scheme formulated by ICICI, the operating agency appointed by BIFR, as WNC became sick under the

provisions of the Sick Industrial Companies (Sp. Provisions) Act, 1985. - Necessary approvals were received for amalgamation of Hyderabad Allwyn Ltd. (HAL) with Voltas Ltd. As per the Scheme the erstwhile equity holders of HAL were to be allotted 12,56,828 No. of equity shares of Rs 10 each and 1,25,682 redeemable preference shares of Rs 100 each. - During March/April the Company offered 99,20,000-14% secured redeemable partly convertible debentures of Rs 100 each to the equity shareholders on rights basis in the proportion of 1 debenture: 2 equity shares held (all were taken up). - 4,96,000 debentures offered to employees of the Company on equitable basis (all were taken up). A total of 15,62,400 additional debentures were allotted to retain oversubscription both for shareholders as well as employees. - Along with the rights issue, the Company offered 10,00,000-14% secured redeemable partly convertible debentures of Rs 100 each to non-resident Indians on private placement basis. - Part A of Rs 60 of each debenture was converted into 1 equity share of Rs 10 at a premium of Rs 50 per share on 1st December. Part B of Rs 40 of each debenture was to be redeemed at par

on the expiry of 7th year from the date of allotment of debentures. 1993 - The cooling appliances business launched four new products viz., water coolers filled with purifiers ductable and slim-line 3 tonne air-conditioners, ceiling mounted split in 1.5 and 3 tonne capacities and 2 tonne room split units. - The pharmaceutical and consumer products division was closed during the year and had also withdrawn from the beverages business. - A new division, the pumps and projects business division set up to manufacture and market circulating pumps in collaboration with Sulzer, Switzerland. - The engineering projects division was merged with the pumps activity to provide the necessary project expertise. - The WNC division commissioned the capillary tubes plant and was stabilising the working of its new thermostat plant. - HAL, a sick industrial company, was merged with Voltas and the amalgamation was approved by the Board for Industrial & Financial Reconstruction (BIFR) in 1994.

1994 - The Home Appliances division introduced 250 L refrigerator in the market and a 100L refrigerator was expected to be launched in the first quarter of 1995-96. 1995 - The cooling appliances business division is to introduce new room air-conditioners to Toshiba design in October. - Voltas gets Good corporate citizen award - The Company has introduced `Soft Look' models of refrigerator in 165 L. & 200 L segments. Company is also launching a premium Frost Free Refrigerator in collaboration with Hitachi. 1996 - Pumps and projected business division successfully developed, manufactured and commissioned the largest sizes of horizontal and vertical pumps in its range. 1997 - After 3 years of growth, the chemicals division faced difficulties during the year as vitamines and veterinary division was affected by liberalised imports under the advance licence scheme. - A whole range of new products was launched both in the room

air conditioning and split segments. The heavy equipment and packaged system division launched ozone-friendly centrifugals and superior quality energy efficient steam, fired vapour absoption machines with Hitachis `Paraflow' technology. - The company also entered into a lease rental agreement with SIPL for lease of factory premises of WNC for a period of 18 months for a total consideration of Rs 10.250 million. - Voltas, India's leading air-conditioning company has been chosen to supply, erect and commission high-tech climate air-conditioning system for India's first information technology park, a comprehensive facility for technology-oriented companies in electronics, information technology, telecommunication and related industries, now under construction at White Field, Bangalore. - Voltas has launched two more frost-free refrigerators of 425 lts and 360 lts capacity. - Voltas has been manufacturing thermostat for refrigerators and airconditioners at thermostat unit under a technical collaboration agreement with Robert Shaw, a subsidiary of Seibe. - Voltas Ltd (chemicals division) manufacturing pesticides at Patencheru industrial zone, in Medak district of Andhra Pradesh,

proposes to commission the final phase of its pollution control measure in accordance with the Andhra Pradesh Pollution Control Board (APPCB) guidelines. - Voltas Ltd has entered into an exclusive distribution agreement with the Hyundai Heavy Industries Ltd (HII) to market hydraulic excavators, wheel loaders, skid steer loaders and allied equipment and attachments in India. - Well-diversified Voltas Limited is undertaking a capacity enhancement programme to increase the production capacity of modular steel furniture from the present 3,000 tonnes to 10,000 tonnes as its unit in Hyderabad. - UNIT RIG, a division of Terex Corporation, USA, has entered into a distribution agreement with Voltas Ltd for marketing of their complete line of surface mining equipment exclusively for the Indian territory. - Voltas Ltd has finalised yet another contract as original equipment manufacturer (OEM) with one of the white goods majors, LG Electronics, to manufacture and supply direct cool refrigerators. 1998 - Voltas recently commissioned Dadra plant, which has a capacity to produce about 40,000 units per annum if it worked one shift,

can go up to one lakh units per annum if the strategic alliances worked out. - Voltas, India's largest airconditioner manufacturing company, has launched a new range of airconditioners named Voltas Vectra, Voltas Verdant, Voltas Vertis and Voltas Vosionarie. - Voltas Ltd is tying up with 20th Century Finance to launch consumer finance schemes in a bid to aggressively push sales of its airconditioners. - The diversified Tata group company Voltas, after months of negotiations, has finally reached an agreement with sister company Rallis India to sell its loss-making chemicals division. - Voltas Ltd has entered into a distribution agreement with BT- Industries Group of Sweden, to provide marketing and product support, for BT's complete range of warehouse trucks for internal materials handling. - The Electrolux Group, the world's largest household appliances manufacturer, has reached a final agreement with the Voltas Ltd to float a joint venture company for manufacturing refrigerators

and washing machines with equity holdings at 74:26 per cent respectively. - Voltas Ltd has signed a contract with Coal India Ltd for the supply of hundred and sixty 120-tonnes capacity unit rig dump trucks. The contract was also entered into by Terex Corporation, US, Unit Rig, US and the World Bank project division of CIL. - Rating agency ICRA has assigned `A1+' (highest safety) rating to Rs 25 crore commercial paper of Voltas Ltd. - Voltas is the only stock in the air conditioner sector which is in a major uptrend. - The company is hiking its installed capacity (of air conditioners) at its Dadra Nagar Haveli plant to cater to rising demand. It is also slimming down -- a voluntary retirement scheme is in the offing to rid itself of excess labour. - The Voltas brand and its operations in Refrigerators and Washing Machines were transferred to EVL from 1st October. 1999 - The industrial court of Mumbai has granted a stay on the Voltas Ltd's voluntary retirement scheme (VRS) in Mumbai following opposition from the Voltas Employees Union. - Voltas - AirInternational Ltd. is a joint venture between Voltas

Ltd. and Air International Grmp, Australia. - The company has doubled its installed capacity to 1.5 lakh room air-conditioning units annually. - Electrolux and Voltas had inked the memorandum of understanding (MoU) in June, 1998 and as per the sale pact under the MoU, four manufacturing units of Voltas Ltd were to be transferred to the joint venture Electrolux Voltas Ltd. - Allwyn brand and its operations were transferred to EVL from 31st March. - Voltas and LG Electronics India Ltd (LGEIL) have, meanwhile, entered into an agreement, whereby the latter would be sourcing approximately 6 lakh refrigerators units for a period of three years starting January 1, 2000. - The Dadra facility has an installed capacity to manufacture up to 1.4-1.5 lakh airconditioners in two shifts, and Voltas is operating at 60,000-65,000 units per annum. - Voltas, the diversified Tata group company, is seeking to enter into capacity sharing arrangements with multinational partners

which have recently made their entry into India. 2000 - The Company has received a special award for completing the electro mechanical pumping project of Ahmedabad Municipal Corporation in 120 days. - The Company has introduced a voluntary retirement scheme called Early Separation Scheme 2000 (ESS) for its employees. - The Unitary Products Group of Voltas, which includes the commercial refrigeration and contract manufacturing businesses, has signed an agreement with LG Electronics, to manufacure and supply over 12 lakh refrigerators. - The Company has sold its wholly-owned subsidiary Voltas Foods & Beverages to a Mumbai-based company, and has roped in a multinational as strategic partner for Perfect Moulds. - The Company has informed that, Voltas Ltd. and IGE (I) LTD. have divested their entire shareholding in Fanuc India Ltd., a joint venture company between Fanuc Ltd., Japan, GE Fanuc Automation, N.A., USA, Voltas Ltd. and IGE (I) Ltd. - L. G. Electronics India and Voltas entered into a tie-up under which the former will source 12,00,000 direct-cool refrigerators from the

latter for the next three years beginning January next. 2001 - Tata group company Voltas Ltd. is relaunching Voltas airconditioners under the `Verdant' brand, a premium model targeted at the retail segment. - Tata group company Voltas Ltd the air-conditioner (AC) and cooling appliances major has posted a strong growth in the split air-conditioner segment. - Ahmedabad-based Lok Prakashan, publisher of Gujarat Samachar, has increased its stake in Tata Group company Voltas to 14 per cent from 13.3 per cent over the last fortnight and may soon launch an open offer for additional 20 per cent stake. 2002 - N D Khurody appointed as Additional Director of Voltas. -Voltas enters into a Joint Venture agreement with Sermo Montaigu, France for perfect moulds. -Voltas Ltd has informed BSE that Perfect Moulds Ltd has ceased to be a subsidiary of the Company consequent upon allotment of 30,00,000 equity shares of Rs 10 each by PML to Sermo Montaigu, France (Sermo), the joint venture partner, on July 06, 2002.The paid up capital of PML of Rs 130 million is now held in equal proportion of 50:50 ie 65,00,000 equity shares of Rs 10 each aggregating Rs 65 million each by Voltas and Sermo.

2003 - Voltas Ltd has informed BSE that Mr Bir D Singh Executive Director has retired from the services of the company on December 27, 2002. Accordingly, he ceases to be a Director and Wholetime Director of the company. -State Govt rejects tax sop to Voltas' new mfg unit in MP -Voltas Ltd has informed that the Ahmedabad Stock Exchange (ASE) has informed that the securities of the company would be delisted from the ASE wef January 15, 2004. 2004 -Voltas Ltd. has informed that in response to their application for voluntary delisting, the Delhi Stock Exchange Association Limited (DSE) has informed the company vide its letter dated December 26, 2003 that the securities of the Company have been delisted from DSE with effect from December 29, 2003. -Voltas Ltd. has informed that in response to the Company's application for voluntary delisting, Pune Stock Exchange Limited (PSE), has informed the company that that the shares of the Company delisted from PSE with effect from January 16, 2004 -Enters into a distribution tie-up with the 62 million euro Italian airconditioning major Uniflair, which specialises in the design,

production and supply of precision air conditioning and cooling solutions for telecom and internet applications -Voltas has launched a range of small capacity refrigerators targeted at semi-urban and rural markets in India. -Ties up with RBS Home Appliances Ltd. for the use of 640 service centres that Voltas has across the country for after sales services -- Simtools Ltd has now become a wholly owned subsidiary of the Company on 27, August 2005. - Chinese consumer durable giant Haier enters into a contract manufacturing agreement Voltas Ltd for air-conditioners and refrigerators. -Voltas introduces new range of water dispensers 2005 -Voltas introduces new series of ACs, may set up plant in Uttaranchal -Voltas secures order for world's Tallest building 2006 -Voltas joins hand with Dutch company -'Maximum foreign exchange earned and repatriated to India from overseas construction and engineering projects' 2007

-Voltas Ltd has informed that Universal Comfort Products Ltd (UCPL) is a 50:50 joint venture Company between Voltas and Fedders International Air-conditioning Pvt Ltd (FIACPL), a subsidiary of Fedders Corporation, USA. 2008 -Voltas Ltd has appointed Mr. Jimmy Bilimoria and Mr. S N Menon, Independent Directors have as Additional Directors of the Company with effect from September 22, 2008. -Voltas launches elegant, new range of Room Air Conditioners in 2008 -Voltas acquires stake in Fedders venture 2009 -Voltas' overseas MEP business achieved professional recognition at the highest levels, at the MEP Middle East Awards 2008. -'MEP Project Manager of the Year' rewards outstanding individual talent and commitment, as seen in actual project outcomes achieved through extraordinary skills and efforts. -Voltas ties up with GMRVF for community development initiative

Date of Establishment 1954Revenue 1018.31 ( USD in Millions )Market Cap 67616.296619 ( Rs. in Millions )Corporate Address Voltas House A,Dr Babasaheb

Ambedkar Road ,ChinchpokliMumbai-400033,

Maharashtrawww.voltas.com

Management Details Chairperson - Ishaat Hussain MD - Sanjay JohriDirectors - A Soni, Ishaat Hussain, J S Bilimoria, Jimmy Bilimoria, N D Khurody, N J Jhaveri, N N Tata, Nani Javeri, Nasser Munjee, Noel N Tata, Ravi Kant, S D Kulkarni, S N Menon, Sanjay Johri, V P Malhotra

Business Operation Air ConditionersBackground Voltas, incorporated in 1954, is one

of India’s leading conditioning and engineering service provider. The company belongs to the Tata Group.

It provides a wide range of solutions to various industries in areas of heating, ventilation and air conditioning, refrigeration, electro-mechanical projects, textile machinery, mac

Financials Total Income - Rs. 46174.016 Million ( year ending Mar 2010) Net Profit - Rs. 3442.195 Million ( year ending Mar 2010)

Company Secretary V P MalhotraBankersAuditors Deloittee Haskins & Sells

Voltas India

Voltas India was established in the year 1954. It is the prime company which provides the requirements of engineering solutions and specializes in the projects. Electro-mechanical projects and services, Engineering products and services and Unitary Cooling products are the operations of the Voltas organization. It supervises electromechanical projects and specializes in performing these projects.

In the cities like Delhi, Chennai, Kolkata and Noida, the Voltas products are largely sold off.

Over the decades Voltas India Ltd. have grown and shown considerable improvement in its field. It offers services in the areas such as heating, ventilation, air conditioning, refrigeration, textile management and treatment and building management systems. It has attained certification of ISI 9001-2000 for the best in handling and organizing the projects. The products offered by them include textile machinery, air conditioners, commercial refrigeration products, water coolers and dispensers, mining and construction equipment. It also offers the Deep Freezers refrigerator and the price for the refrigerator approximately varies. But to give you a slight idea, it is generally offered at Rs. 13,000 to Rs. 29,000. Voltas Air Conditioner is popular in the cities like Delhi, Kolkata, Noida and Chennai. The shares of the company are dealt by the Bombay Stock Exchange (BSE). The share price of Voltas India has seen an upsurge in the market.

Voltas Careers

The Career prospects offered by the company include the technological development and enhancement of the skills of an individual. In Voltas, the scope for the career development is larger. Voltas India Pvt. Limited provides good services in air conditioner, refrigerator and water dispenser. The Dealers network is wide in range for the AC. Voltas has shown considerable and remarkable development in its approach. As far as the customer care is concerned, it specializes and provides the best services to the customers.

Voltas.com

The official website of Voltas provides information about the profile of the company, its objective, mission, achievement, review, the careers it offer and the products offered by them. In order to get the job offer to work in, you need to register yourself on the website of Voltas India Limited.

The customer care services are also provided by them to help in fulfilling the needs and the requirement of the customer.

Voltas Technologies India Limited'A' Block, Dr. Babasaheb Ambedkar Road

Chinchpokli, Mumbai 400 03 Phone no.: 022-66656 666 Fax: 022-66656 311 Email: ccd@voltas.comWebsite: www.voltas.com

Voltas has long been both pioneer and front-runner in HVAC & R  (Heating, Ventilation, Air Conditioning & Refrigeration) in India, with more than 50 years of accumulated expertise. Powered by revolutionary technology, Voltas Air conditioners bring with it comfort and convenience into your life.

UPBG VISION   To achieve over Rs 1600 Crores turnover by 2010-11   Be EVA-Positive   Be a Profitable Air Conditioner brand   Be a market leader in Water Coolers & Commercial

Refrigeration products

UPBG MISSION To be a passionately Customer focused Organization

providing innovative products and services and exceeding all stakeholders expectations.

UPBG VALUES   Passionate customer focus   Agility   Innovative cost consciousness   Disciplined teamwork

UPBG HISTORY In the year 1954 a collaboration with the Volkart Brothers, a

Swiss firm and Tata Sons Limited, resulted in the formation of Voltas Limited, which is now one of the leading Air conditioning concerns of India.

  Throughout the years Voltas- UPBG has a list of innovative

firsts in India:

    Manufactured the first ever room air conditioner in 1954.   Set up the first integrated plant in 1969.   Introduced the first innovative split air conditioner in

1984.   Introduced the tall and elegant slimline air conditioner in

1993.   Introduced micro-processor based packaged unit in 1998.   First to introduce water dispensers with mini fridge.   Launched the 55 litre refrigerator.   Among the first to launch sub 1.0 Ton ACs.   Introduced Energy Efficient Air-Conditioners in 2007 First to introduce corner split AC in 2008

Landmark projects in the Middle East...by Voltas

On skylines and cityscapes in the Middle East, you'll find some of the world's most awe-inspiring structures. You'll encournter built environments and public spaces which are brilliantly innovative in design, futuristic in technologies, and awesome in scale and scope. And you'll find Voltas deeply involved in many of them, contributing design and execution of world-class electro-mechanical technologies.

By winning a slew of prestigious project orders in Dubai, Abu Dhabi and Qatar, Voltas has proved beyond all dispute that it is a force to reckon with in the global league. With projects successfully executed in over 30 countries, Voltas has long been India's largest exporter of Mechanical, Electrical & Public Works (MEP) projects. Today, the

                           Ferrari Experience & F1

racetrack, Yas Island, Abu Dhabi

Mall of the Emirates, Dubai

Company's reputation goes far beyond that statistical distinction, into the dimensions of global standards, respect and trust. Voltas has the unquestioned credibility to bid for, and win, the most demanding high-value projects, on par with leading international contractors.

The 700 m Burj Tower rises like an exclamation mark emphasizing that statement. The 162-storey edifice will be practically a vertical city, with residential apartments, hotels, boutiques and offices, arranged in a stunning spiralling taper which evokes the geometrics of desert flowers and familiar Islamic architectural motifs. Voltas was awarded the sub-contract for MEP jointly with Emirates Trading Agency (Dubai) and Hitachi Plant Engineering & Construction Company (Singapore). The overall sub-contract value is AED 829 million (Rs 974 crores), with Voltas' share being AED 311 million (Rs 365 crores). The tower is being developed by EMAAR Properties, Dubai, with Samsung Corporation being the main contractor.

When executing this project, Voltas has been at global centre stage, along with all the others helping build the Burj Khalifa district - including 500 international consultants and more than 20,000

Sidra Medical & Research Centre,

Qatar 

Villaggio Mall, Qatar 

Wafi Hotel & Mall, Dubai

construction workers. The entire urban development promises to be truly futuristic in its vision, epic in its proportions, and dazzling in both design and engineering terms. By being part of this landmark development, Voltas entrenches itself as a global force to be reckoned with.

Then there's the Wafi Hotel and Mall,  a stunning pyramid-shaped 240-room hotel in Dubai. The edifice houses nine food & beverage outlets, ball room, 7 meeting halls, spa, gym and a 242,000 sq ft retail space. Voltas won the order for complete electro-mechanical works (HVAC, electrical, plumbing and drainage).

Equally awesome projects are the Mall of the Emirates, the largest shopping facility outside N America; and the Villaggio Mall in Abu Dhabi, whose major outlets include Carrefour (14000 sq. m.), ice rink (60m x 30m), seven cinemas and one multiplexer, entertainment facilities, indoor canal with boating facility and many other specialties.

For something entirely different, there's the Ferrari Experience in Abu Dhabi. It's the centrepiece of Abu Dhabi’s $40 billion Yas Island project. Developer Aldar Properties’ vision for Yas Island is

Burj Khalifa 

“to become the world’s foremost tourism and leisure playground”. Designed by Italian architect Massimo Iosa Ghini, the Ferrari Experience features 24 attractions that will promote the Ferrari brand.

The rides include a water ride through a massive Ferrari engine and a high-tech simulator ride involving a 70m-high ‘g force’ tower mimicking a racetrack’s cornering forces. A twin roller-coaster ride, a world’s first, is also planned. Driving experiences will be offered in the only Ferrari driving school outside the automaker’s base in Italy. Other family-friendly fares include an Italian piazza, an interactive museum, a theatre for live performances, and Ferrari stores.

Voltas’ scope of work includes MEP services for all landlord (i.e. common) areas and an interface of these services with tenant area services.

A companion project is the F1 Race Track, also on Yas Island, and part of the same vacation complex. The track is 5.6km long, divided into a 3km permanent circuit for the public and a 2.6km city layout exclusively for Formula One racing. boasting an average speed of 198 km/h. There are 26 buildings along the track. The large

ones include Main Grand Stand, North Grand Stand, West Grand Stand, Dragster Grand Stand, PIT Building A & B, Media Centre, Medical Centre, Workshop, Plant Building, and Kitchen, etc.

Voltas’ scope of work includes supply, installation, testing and commissioning of Ventilation, Air-Conditioning and Public Works systems, including chilled water distribution, conditioned air distribution, smoke extract system, fire-fighting system, domestic cold and hot water distribution.

In recent years, Voltas has been increasingly prominent in Qatar. Especially noteworthy is the contract for the Sidra Medical & Research Centre, the first such facility in the region based on the N American model. Located on a 22-hectare site, the Centre has a full teaching hospital, specialist departments, outpatient clinics, and complex systems for traffic flow, people movement and interconnectivity. Voltas will execute all building works, utilities and services except the purely electrical.

In years to come, it's safe to say that Voltas will be increasingly showcased on global cityscapes, in edifices featuring futuristic architecture combined with

complex large-scale technologies. Other companies seek new horizons; Voltas helps create them.

Q: Congratulations on taking over as the Managing Director of Voltas. What are your feelings as you do so?A: I feel honoured to be entrusted with this role. Our Company has a rich heritage and it is my responsibility to build on the foundation created by Mr. Nawshir Khurody and Mr. Ashok Soni. I hope that we achieve greater heights. I hope that we earn greater respect from customers, shareholders and the public. And I hope that all staff members feel a tremendous sense of pride in what we, all of us together, accomplish.Q: What was your primary role when you joined Voltas, and did it help you in reaching where you are today?A: My initial role, starting September 2004, was as Head of Corporate Strategy. This position exposed me to the nuances and complexities of the wide variety of businesses in our Company, as also helped me understand the people running them. This was the springboard for my future roles in Voltas. Q: How did you find your transition to COO and what were the challenges you faced?A: In September 2005, I was appointed the Chief Operating Officer of the Unitary Products Business Group (UPBG), the Materials Handling Business Division (MHBD), and the Mining & Construction Equipment Division (MCED). It was a move from a support role to a line role, with direct Profit & Loss responsibility. The immediate challenge was that UPBG was in severe financial difficulties and there was also an industrial relations problem at the Hyderabad Unit (HU) / refrigeration business. The HU had actually made losses for most years, since 1994. Global metal prices shot up in 2005 and we were losing Rs.1.5 crores per month, so we had to close the business, it was a matter of survival.

Q: Was it painful, and what did you do next?A: All closures are painful, anyone would much rather start something new. But if costs go out of hand and a business keeps losing money in spite of every effort, then there is no option to closure, otherwise you endanger other healthy businesses and other people’s jobs. So we exited the household refrigerator business and decided to focus only on commercial refrigeration. We closed HU and started a new, smaller refrigeration factory in the excise-free zone at Pantnagar.Most of our competitors had already moved to such zones, earlier, so their plants were producing at a lower cost and pricing us out. So this shift was very important and helped stabilize the business.

Q: How did the Materials Handling Business and the Mining & Construction Equipment Business perform in those years?A: Fortunately, at that time, MHBD and MCED were on a good wicket, with the strong investment cycle boosting orders, revenues and margins. Under Milind Shahane’s leadership, many new products were introduced and processes were improved, so those businesses were doing fine, and I could focus my personal attention on UPBG.

Q: What has been your most satisfying achievement in recent years?A: The turnaround at UPBG has been the most satisfying. The Division had accumulated losses of over Rs.150 crores which have been wiped out in the last three years. I can’t tell you the FY 09-10 profits till the accounts are approved, but you can see from the published quarterly results that UPBG showed a segment contribution of over Rs.75 crores in the 9 months ended December 2009.

Q: How did you turn around UPBG?A: Though the Commercial Refrigeration business improved after the changes described earlier, we faced a tough situation in the Room Air Conditioning business in 2006. The competition was tremendous, with all the Korean, Japanese, and Western

multinationals as well as Godrej, Onida and Videocon jostling for the comparatively small market, and profitability had eroded. We had in fact started losing money. Then the top management team of UPBG, the 5 senior most VPs and GMs, resigned and left almost simultaneously.What seemed a disaster proved to be a blessing. We got a new team in place – Pradeep Bakshi, Jayant Balan, and others – who took up the challenge with great determination and fresh, new thinking. We also got sound commercial inputs from Behram Sabawala and E C Prasad. So it was a team effort. It’s interesting how the team rose to the occasion, how people could do extraordinary things, when motivated.

We took decisive strategic steps both on the customer-facing end, and the supply side. We created a new customer value proposition around energy-efficient ACs, even as multinationals like LG and Samsung were hesitating. We priced our ACs higher, so there was a risk. But the strategy itself was sound, created around the insight that the running cost of ACs is vitally important to consumers. And the products were good, the advertising story was convincing, so the positioning worked – customers showed that they were willing to pay more upfront and recover that investment through lower electricity bills. Our room AC sales zoomed 41% in 2007-08, leaving competitors way behind.

On the supply side, we changed our business model, making sourcing costs variable. Our supply chain combines in-house manufacturing, local out-sourcing, and imports from China, giving us flexibility. In an environment where input prices, currencies and competitor offerings fluctuate rapidly, this flexibility allows us to lower product costs. We have also changed the warehousing/ logistics model, replacing a string of old, fixed cost godowns, with a chain of modern warehouses operated by a Tata Company (DIESL) on a per unit basis.

Q: You were appointed “President” in October 2008 and given additional charge of international operations, at a time when the global financial turmoil was at its peak. Was

the electro-mechanical projects business impacted by the economic downturn?A: Our Electrical & Mechanical Division (EMD) has a significant presence in the UAE and Qatar. We also do projects in other Asian and African countries, including Singapore. So yes, we were also impacted by the global economic downturn. There was a distinct slowdown in the award of new electro-mechanical projects, with clients postponing and suspending projects. This was particularly pronounced in Dubai, but we have seen the effect in other places too.

Fortunately, two years back, our Chairman (Mr Ishaat Hussain) had advised EMD not to pursue new business in Dubai, to focus instead on Abu Dhabi and Doha, Qatar. The decision turned out to be very prudent. So most of our large projects today are in Abu Dhabi and Doha, where the impact was less.

Q: What is your view of our performance in the projects business?A: We have been in the projects business in the Middle East since the 1970s and, under the leadership of Pradeep Dhume, acquired a healthy reputation for timely execution and quality. More recently, under Shaukat Ali Mir, EMD has completed many large and complex projects – the Burj Khalifa Tower in Dubai, the world’s tallest building, as also the famous Formula 1 Race Track at Abu Dhabi. And C D Pant’s team is working on the ultra-modern Sidra Hospital at Doha. As these jobs require great technical expertise and project management skills, all of us in Voltas feel justifiably proud of these achievements.

Q: Is the worst over for EMD, or do you see challenges ahead? A: While the worst does seem to be over for the Middle East — with the price of oil, their main source of income, up from  US$ 38 a barrel a year ago to US$ 80 now – the environment is nevertheless tougher. Clients, and governments, are now more cautious, and they want to pay lower prices to contractors on new projects. There are also fewer projects being awarded, even in Abu Dhabi and Qatar. So the competition is tougher, and

project contract values are lower.

Q: How then should EMD operate, in this tougher environment?A: In this tougher economy, we need to find ways to lower costs, both by smarter material procurement as well as by enhanced productivity. Overall, project execution effectiveness must go up and operating cost must come down. I don’t see any other way, we have to bid for new projects at lower prices than in the past, but make profit nevertheless.

Q: How about India, is the economy improving and will Voltas bounce back quickly from the slowdown? What challenges do you see ahead? A: Most consumer businesses have bounced back strongly in India, we’re seeing that for UPBG’s room ACs and the Commercial Refrigeration products. There are also some signs of recovery in capital goods, with better orders in our Mining & Construction Equipment Division and the Textile Machinery Division.

But the Electro-Mechanical & Refrigeration Business Group (EM&RBG) is still facing some headwinds. In particular, companies are going slow in the “building environment” – the commercial real estate sector comprising IT parks, offices, hospitals, hotels, malls, etc – which were our mainstay. Both order booking, and execution, have been slow in 2009-10, impacting us as well as competitors.  We also face similar challenges in international markets in the “building environment”, resulting in a slower inflow of new orders and a reduced Order Book. Further, the volatility in the commodity markets has increased input costs, with resulting margin pressure, so these are the challenges EM&RBG and EMD have to overcome.

Q: Besides improving productivity and managing operating costs, what do you see as the way ahead for the projects business, both in India and overseas?

A: Since the “building environment” has slowed down, we have to address new customer segments, particularly the Industrial and Infrastructure projects. You know we won the Chennai and Kolkata airport contracts. EM&RBG, under the leadership of Gopi Krishna, are also working on the electro-mechanical requirements in the Power and Oil & Gas industries.

EMD, too, are moving in the same direction. In addition, we have to win business in countries like Saudi Arabia, where large investments are planned in infrastructure, education and medical care.

To succeed in these strategies – i.e. expansion in new verticals and new countries – we need to build additional capabilities. We need to hire and grow the right people, and build the right skill sets. But, at the same time, we need to stay nimble and evolve a lean, low-cost operating structure, to compete successfully in competitive markets.

Q: Isn’t it surprising that our project businesses in India and overseas operate independently, with little coordination, though the work is similar?A: Well, there are some differences between EMD and EM&RBG, the international projects are fewer but much larger, in value as well as complexity, while domestic projects are smaller and, till now, still predominantly in the HVAC area. But yes, we need to work better with each other, to transfer best practices and even people between them. As you know, Ashok Joshi has been appointed President (Electro-Mechanical Projects and Services), and he has that responsibility.

Q: Do you see us getting into new businesses along the line?A: Well, I do definitely envisage a new thrust in the Water Management business. While this business is not new to Voltas, it is very small in size and scope. But it is now increasingly clear that water shortages are going to get worse everywhere. Governments will then be forced to charge more for fresh water supplies, they will also increase pressure on companies to use

water sparingly as also to treat and re-use their waste water. So it’s important for us to gain expertise and experience in this area, it’ll be a big business opportunity in years to come.

Q: Now that 2010-11 is here, will we be soon announcing a new Vision Statement for Voltas? A: Yes, 2010-11 is the last year of “Megavol”, so it’s time to crystallise where we want to go over the next 5 years. Towards this end, we have taken inputs from many people, cutting across the Company and going beyond my immediate colleagues. The Tata Strategic Management Group has also been appointed, they will work with our management team as well as our Board of Directors, to develop the future roadmap for the company.

Q: How do you see the economy over the next few years and what will this mean for our future success? A: Voltas has grown significantly over the last five years and there are many strong capabilities and processes in our Company. So we can justifiably be proud of those achievements.

Growth will continue in Asia, but it is unlikely that we will see (at least in the immediate future) a recurrence of the runaway economic boom of 2003-2007. Because of the volatility of the last two years, customers have become – and will continue to be – more demanding. So, going forward, success will depend on our ability to better understand the needs of customers, to create low cost and flexible delivery models in our businesses, and to design our organisation structures and processes to achieve those aims.

Q: Are there any specific cultural issues we need to change?A: We will have to take more calculated risks. All strategies, all decisions, involve choices and risks, and not taking a decision is itself a risk! The question is only whether one chooses wisely, or not. So we have to learn to work smarter, to base our strategies and choices on hard facts, clear logic and deep insight.

We also need to be willing to challenge the existing thinking, to learn to handle different views and, finally, to pull together as a

unified team once a direction has been chosen. In this context, it is admirable how our Textile Machinery Division (TMD) pulled out of the downturn of 2009-10, with Sudhir Sharma and Kamatchisundaram leading from the front.  Actually, S Venkataraman, COO of TMD for many years, had built a very cohesive team over the years, with a strong culture of commitment, and that is a strength which we saw in difficult times.

Q: So the people dimension is important?A: Very important, I cannot emphasize this enough.We have to strengthen our people capabilities. We have to grow our teams, train them better, give actual responsibility and authority to younger people, and encourage job rotation in order to develop more rounded managers. And if we need critical skills that are not available inside, we should find ways to hire good people from outside. Prasanna Pahade created a great team in Corporate Planning and their contribution to all our businesses has been immense, a lot of new thinking took place and we found new directions. But we did not give them suitable opportunities and therefore could not retain many of these youngsters. So these are things we need to address.

Q: Are you optimistic about the future of Voltas?A: Yes, very optimistic, because we operate in those countries which are growing the fastest, and we are in businesses that will be as relevant, if not more, in the future. So we have immense opportunities. But we must, as part of the Tata Group, realize our full potential, to grow in size, scope and significance. I hope that each one of us, whatever our roles, will strive to take Voltas to greater heights. It’s a responsibility we owe to our Company, to prepare for a better future, and to take it there.

Voltas, incorporated in 1954, is one of India’s leading conditioning and engineering service provider. The company belongs to the Tata Group.

It provides a wide range of solutions to various industries in areas of 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.

Voltas has executed projects in more than 30 countries worldwide. It has the largest customer base in industrial, commercial, institutional and the home segment.

Business

Electro-mechanical Projects and Services Under this it provides a wide range of electrical, mechanical, HVAC (heating, ventilation and air conditioning) and refrigeration solutions. It also provides water management and treatment. Voltas has a presence in Oman, Qatar, Saudi Arabia, New Zealand, Ethiopia, Kenya, Libya and Mauritius among others.

Engineering Products and Services In this segment it manufactures textile machinery, mining and construction equipment, machine tools and material handling products such as forklift trucks, container handling equipment, etc.

Unitary Cooling Products It manufacturers a wide range of cooling appliances such as air conditioners, water coolers, deep freezers etc and provides commercial refrigeration solution to multiplexes, commercial complexes and luxury liners.

Chemicals trading It is the oldest division of Voltas operating for more than 45 years.

Recognition

It is India’s no.2 brand in the air conditioner segment with a market share of 16%.

It is leader in the water cooler segment in India.

It is leader in commercial freezers and coolers in India.

Voltas was awarded 'MEP Project Manager of the Year' at MEP Middle East Awards 2008.

Outlook

Voltas has lined up projects in electro mechanical segments for air conditioning with clients like ITC hotel-Mumbai, TCS IT Park-Chennai, TCS Office Complex- Hyderabad, Hyderabad International Airport, Ambi Mall-delhi and Magarpatta Cybercity-Pune.

S.No Name Designation

1 Ishaat Hussain Chairman

2 Nasser Munjee Director

3 N J Jhaveri Director

4 Ravi Kant Director

5 N D Khurody Director

6 N N Tata Director

7 J S Bilimoria Director

8 S N Menon Director

9 V P Malhotra General Manager

Company

Sales(Rs.Millio

n)

Current

Price

Change

(%)

P/E Rati

o

MarketCap.

(Rs.Million)

52-Week

High/Low

Voltas 45417.91 205.05 0.7119.6

467616.30 213/128

Blue Star

24984.49 437.00 0.5319.1

239661.82 454/325

Hitachi HomeLife Sol

6405.13 340.45 1.5816.7

17708.82 400/73

Fedders Lloyd

4602.17 98.00 -0.10 9.06 3030.82 111/28

Lloyd Electric

5853.21 82.00 0.61 6.51 2549.77 93/35

As part of its retailing stratgy, Voltas Ltd, part of the Tata Group is planning to expand its exclusive outlets known as Voltas Dome from 20 to 70, within a year. In addition, the company is also planning to strengthen its position in the institutional segment in an effort to promote its entire range of window and split air conditioners.

Informs Mr RSSN Raju, vice president (operations) Voltas Ltd: "The objective behind our new retail plans is to enhance the brand visibility of our entire range of window and split air conditioners and to spur volumes. Currently, Voltas Dome contributes an additional 10 to 15 per cent to the companys overall sales turnover."

In addition, the company in the next few years is planning to invest Rs 50 crore in marketing the Voltas air conditioner brand of which Rs 20 crore is already being allocated to the current years advertising budget. "Which is in fact a three-fold increase over last year, in addition to an inspired customer relation management programme and a new customer-friendly scheme," adds Mr Raju.

As part of its marketing strategy, the company is planning to build relationships with architects and interior designers to promote its entire range of split and window air conditioners in both the institutional and retail segments, says Mr Raju.

Adds Mr Raju: "We have decided to fight competition and channelize our energy to capitalise on this potential. We have set an objective to become a leader even in retail segment by 2004 in addition to the institutional segment where Voltas is at number two position."

According to Mr Raju, the air conditioner market is expected to grow at a rate of 15 per cent in the next few years, while the home segment is expected to grow at a minimum rate of 15 per cent in the next few years, the retail segment is expected to grow at a minimum rate of 40 per cent. Explains Mr Raju: "Considering that the unit penetration level of home appliances such as television is 40 lakh, refrigerators is 30 lakh, the air conditioner household segment has a huge potential."

As part of Voltas' Crystal Care Service, the company has already opened two call centers in Mumbai and Delhi. "Another four are shortly coming up at Chennai, Bangalore, Hyderabad and Kolkatta. All this and more makes the Voltas Crystal Care at 365 (days a year), 7 (days a week) and 24-hour service," says Mr Raju.

In the past month, senior executives at Voltas' [ Get Quote ] air-conditioning division have been busy travelling between major Indian cities, unveiling new products for the season and announcing the company's strategy to tap SEC B and C markets with a range of competitively-priced products.

Voltas is already among the top three air-conditioner brands in the country, but that's not nearly enough. The Tata Group company wants an even bigger piece of the pie than it has, and it wants its share of the growing action in the Indian AC market (which is clocking growth of more than 20 per cent a year).

The mood in Voltas today is aggressive - a welcome change from even a few years ago, when the company was being looked upon as a white elephant in a market that had been taken over by multinational brands such as LG, Samsung and Carrier.

The company had suffered significant losses and its market share dropped from a high of 30-40 per cent in the early 1990s to around 7 per cent in 2000-01. From being the No.1 player in the Indian AC market in 1992-93, Voltas was down to an also-ran No. 6. The wake-up call came as a directive from the Tata leadership - perform or perish.

Well, Voltas has clearly performed. the strategist takes a look at how the AC  division restructured itself and returned to a leadership position.

Fall from top

For close to five decades (from its inception in 1954 to 1992), Voltas ruled the Indian AC market with close to 40 per cent market share. Of course, life was simpler back then - there was no multinational onslaught and the branded players in the market could be counted on the fingers of one hand: Voltas, Blue Star [ Get Quote ], Fedders Llyod and Arco. The unorganised small-scale industry was strong, tapping more than half the market.

All that changed in 1993, when the American AC giant Carrier (which had entered the Indian market in 1987) launched a new range of new generation ACs, which promptly knocked off Voltas from its leadership position. And between 1993 and 1997, with the entry of the Korean, Japanese and other global giants - LG, Samsung, National, Electrolux, Whirlpool [ Get Quote ] and so on - Voltas' market eroded further. By 2001, its position slipped to No. 6 (LG emerged as No.1), with market share plunging to a low 7 per cent.

Says Raman Mangalorkar, head, consumer and retail, at management consultancy AT Kearney: "The MNC brands changed the rules of the game. The LGs and Samsungs came at a time when consumers were yearning for technologically superior and smarter products. They raised the quality levels, came with a plethora of choice options, and were able to drive demand."

Voltas wasn't prepared for the changing market dynamics. Before the entry of the MNCs, the AC market was primarily

driven by sales in the institutional market (government and corporations) - the residential or retail AC market was minuscule. Even after the entry of the new players, Voltas's share in the retail segment hovered around 5 per cent.

Says K J Java, senior vice-president, Unitary Products Business Group, Voltas Ltd, "We made the mistake of not taking the retail AC market seriously. The MNCs had opened up this market and made deeper inroads. They were buying more shelf space, which Voltas never had."

That's when the Tata leadership came up with a directive to Voltas to either reclaim its position among the top three players, or exit the AC business altogether.

Do or die

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," agrees Java. The key objectives of the "Big Bang" were, therefore, to increase revenues from sales achievements, and make Voltas the lowest-cost manufacturer. "Economies of scale were critical," he adds.

Product comes first

The first key initiative was to revamp the product itself. Market research by Voltas showed a less-than flattering customer perception of the company's air conditioners: the general consensus seemed to be that Voltas ACs were old-fashioned, outdated, bulky dabbas.

Voltas hadn't benchmarked its products against MNC offerings, which were superior both technologically and aesthetically, as well as competitively priced. The company had no model catering to the low-end market, nor any that marked the shift in ACs from premium to affordable, or luxury to comfort.

"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. We needed a partner that could not only provide us with technology, but also help in keeping the manufacturing cost low," says Java.

That partner came up in Fedders International, a leading player in the US room AC market, with a worldwide presence, with whom Voltas signed a 50:50 manufacturing only joint venture in 2001. There were several immediate benefits from the JV.

First, it helped Voltas plug into Fedders' technology and design know-how to launch new-generation products - Voltas was allowed access to Fedders' R&D centres in Singapore and Florida [ Images ]. The result was the Vertis brand, with a range that matched competitors' offerings - it had features like purification filters, ionisers to kill bacteria, economy mode to save on electricity and so on.

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.

The global sourcing agreement also brought significant cost benefits to Voltas. Fedders sources all its components - from copper tube to compressors - by negotiating with manufacturers worldwide. The JV allows Voltas access to components from the same manufacturers at the same low price-points.

In fact, Voltas claims that global sourcing has helped it become the lowest-cost manufacturer in India. In the past five years, material costs for window ACs have dropped 20 per cent, from Rs 10,400 per unit to under Rs 8,000 a unit, while the conversion cost has come down by a remarkable 60 per cent, from Rs 2,000 a unit to Rs 650 a unit.

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.

Channel revamp

Of course, it wasn't enough to just spruce up its offerings. Voltas also needed to reach out to new markets and new customers. Which meant shaking up its distribution network.

The first step was to weed out non-performing dealers. Voltas identified some 300 of its 650 dealers - close to half - as non-performing. They were given strict deadlines to clean up their acts - while 200 dealers upgraded their performance to meet the new, higher standards Voltas demanded, about 100 were shown the door.

They were promptly replaced by 200 new dealers, taking Voltas's dealer network to 750 by 2001. At present, the company has about 2,000 dealers, which will be hiked to 3,500 by the year-end, while franchisee spread will increase from 350 to 500 over the same period.

Back in 2001, dealer confidence was low and the default rate high. The trend was towards single-product dealers, who were "supported" through credit extensions. Now Voltas put in place a dealer-friendly policy that offered subsidies and incentives, but also raised the performance bar.

The company signed memoranda of understanding with the dealers, clear spelling out the operational procedures and norms to be followed and the scope of work between the dealer and Voltas.

Voltas set aside 1 per cent of its turnover for training and development of its channel partners. Money was pumped into dealer infrastructure, manpower training (with certification programmes for all employees), sharing costs of mobile vans, cooperative ads and so on.

Says a Voltas marketing executive, "Dealer satisfaction is important as we are no longer into direct selling and servicing in the residential AC market. Unless they are satisfied, they can't satisfy the customer."

Changes were also made in the after-sales part of the business. Voltas's earlier model was of direct servicing where the company sent out its own AC engineers to attend to complaints. Now, it made the dealers responsible for customer care - and in one stroke, cut its workforce by more than a third, from 370 to 216.

Even the dealers have strict guidelines on interacting with customers and responding to complaints. How many servicemen are required, what kind of servicing kit is required, what spare parts must always be there, the dress code of a servicemen - everything is spelt out for the dealer.

Time targets - under four hours in the metros - have also been set for responding to customer calls. And since the dealers and the head office are connected through a SAP system, all transactions are online and transparent.

Brand building

When the Tata management laid down its ultimatum, Voltas knew it needed to focus on the demand for ACs in homes. While room AC sales were growing at 26 per cent, household penetration was a mere 2 per cent - the potential was tremendous.

Say Manglokar of AT Kearney, "A long relation with the consumers can have its pros and cons. In Voltas's case the cons were more. It lacked the freshness that the MNCs provided." Voltas's Java agrees. "The brand recall was poor and we had a fuddy-duddy image. The task at hand was to transform Dilip Kumar [ Images ] into Shah Rukh Khan [ Images ]."

To do that, Voltas began by switching ad agencies - from O&M to Euro RSG, which came up with a new positioning platform: "Acs with IQ." The ads focused on defining features of Voltas's new product range such as uniform cooling, energy-saving, timers and air filters, with cues of performance and value-addition through technological innovation.

The campaign kicked off with the Vertis flagship, and went on extend the "ACs with IQ" proposition to every Voltas AC. A series of print ads spelt out what was "intelligent" about the range.

Subsequent promotions have focused on themes like customer service and low costs of ownwership.  In 2004, Voltas changed its theme somewhat, staking claim to the aspirational product platform - campaigns focused on its new Rs 9,900 AC, a first in the market.  Celebrities like Shah Rukh Khan and Shoaib Akhtar [ Images ] were also roped in to strengthen the brand.

Of course, all this doesn't come cheap: between 2001 and 2004, Voltas invested more than Rs 50 crore (Rs 500 million) in branding initiatives; last year, it spent Rs 17 crore (Rs 170 million) on marketing.

The figure for this year is somewhat higher: Rs 20 crore (Rs 200 million). But then, the theme has changed too. Since the focus now is on capturing a larger share of the mass market, Voltas's new campaign is aimed at the aam aadmi, and has been shot in a distinctly non-urban environment. The tagline, too, has changed - Voltas is now "India ka AC".

Did it work?

In the past month, senior executives at Voltas' [ Get Quote ] air-conditioning division have been busy travelling between major Indian cities, unveiling new products for the season and announcing the company's strategy to tap SEC B and C markets with a range of competitively-priced products.

Voltas is already among the top three air-conditioner brands in the country, but that's not nearly enough. The Tata Group company wants an even bigger piece of the pie than it has, and it

wants its share of the growing action in the Indian AC market (which is clocking growth of more than 20 per cent a year).

The mood in Voltas today is aggressive - a welcome change from even a few years ago, when the company was being looked upon as a white elephant in a market that had been taken over by multinational brands such as LG, Samsung and Carrier.

The company had suffered significant losses and its market share dropped from a high of 30-40 per cent in the early 1990s to around 7 per cent in 2000-01. From being the No.1 player in the Indian AC market in 1992-93, Voltas was down to an also-ran No. 6. The wake-up call came as a directive from the Tata leadership - perform or perish.

Well, Voltas has clearly performed. the strategist takes a look at how the AC  division restructured itself and returned to a leadership position.

Fall from top

For close to five decades (from its inception in 1954 to 1992), Voltas ruled the Indian AC market with close to 40 per cent market share. Of course, life was simpler back then - there was no multinational onslaught and the branded players in the market could be counted on the fingers of one hand: Voltas, Blue Star [ Get Quote ], Fedders Llyod and Arco. The unorganised small-scale industry was strong, tapping more than half the market.

All that changed in 1993, when the American AC giant Carrier (which had entered the Indian market in 1987) launched a new range of new generation ACs, which promptly knocked off Voltas from its leadership position. And between 1993 and 1997, with the entry of the Korean, Japanese and other global giants - LG, Samsung, National, Electrolux, Whirlpool [ Get Quote ] and so on - Voltas' market eroded further. By 2001, its position slipped to No. 6 (LG emerged as No.1), with market share plunging to a low 7 per cent.

Says Raman Mangalorkar, head, consumer and retail, at management consultancy AT Kearney: "The MNC brands

changed the rules of the game. The LGs and Samsungs came at a time when consumers were yearning for technologically superior and smarter products. They raised the quality levels, came with a plethora of choice options, and were able to drive demand."

Voltas wasn't prepared for the changing market dynamics. Before the entry of the MNCs, the AC market was primarily driven by sales in the institutional market (government and corporations) - the residential or retail AC market was minuscule. Even after the entry of the new players, Voltas's share in the retail segment hovered around 5 per cent.

Says K J Java, senior vice-president, Unitary Products Business Group, Voltas Ltd, "We made the mistake of not taking the retail AC market seriously. The MNCs had opened up this market and made deeper inroads. They were buying more shelf space, which Voltas never had."

That's when the Tata leadership came up with a directive to Voltas to either reclaim its position among the top three players, or exit the AC business altogether.

Do or die

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," agrees Java. The key objectives of the "Big Bang" were, therefore, to increase revenues from sales achievements, and make Voltas the lowest-cost manufacturer. "Economies of scale were critical," he adds.

Product comes first

The first key initiative was to revamp the product itself. Market research by Voltas showed a less-than flattering customer perception of the company's air conditioners: the general consensus seemed to be that Voltas ACs were old-fashioned, outdated, bulky dabbas.

Voltas hadn't benchmarked its products against MNC offerings, which were superior both technologically and aesthetically, as well as competitively priced. The company had no model catering to the low-end market, nor any that marked the shift in ACs from premium to affordable, or luxury to comfort.

"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. We needed a partner that could not only provide us with technology, but also help in keeping the manufacturing cost low," says Java.

That partner came up in Fedders International, a leading player in the US room AC market, with a worldwide presence, with whom Voltas signed a 50:50 manufacturing only joint venture in 2001. There were several immediate benefits from the JV.

First, it helped Voltas plug into Fedders' technology and design know-how to launch new-generation products - Voltas was allowed access to Fedders' R&D centres in Singapore and Florida [ Images ]. The result was the Vertis brand, with a range that matched competitors' offerings - it had features like purification filters, ionisers to kill bacteria, economy mode to save on electricity and so on.

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.

The global sourcing agreement also brought significant cost benefits to Voltas. Fedders sources all its components - from copper tube to compressors - by negotiating with manufacturers worldwide. The JV allows Voltas access to components from the same manufacturers at the same low price-points.

In fact, Voltas claims that global sourcing has helped it become the lowest-cost manufacturer in India. In the past five years, material costs for window ACs have dropped 20 per cent, from Rs 10,400 per unit to under Rs 8,000 a unit, while the conversion cost has come down by a remarkable 60 per cent, from Rs 2,000 a unit to Rs 650 a unit.

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.

Channel revamp

Of course, it wasn't enough to just spruce up its offerings. Voltas also needed to reach out to new markets and new customers. Which meant shaking up its distribution network.

The first step was to weed out non-performing dealers. Voltas identified some 300 of its 650 dealers - close to half - as non-performing. They were given strict deadlines to clean up their acts - while 200 dealers upgraded their performance to meet the new, higher standards Voltas demanded, about 100 were shown the door.

They were promptly replaced by 200 new dealers, taking Voltas's dealer network to 750 by 2001. At present, the company has about 2,000 dealers, which will be hiked to 3,500 by the year-end, while franchisee spread will increase from 350 to 500 over the same period.

Back in 2001, dealer confidence was low and the default rate high. The trend was towards single-product dealers, who were "supported" through credit extensions. Now Voltas put in place a

dealer-friendly policy that offered subsidies and incentives, but also raised the performance bar.

The company signed memoranda of understanding with the dealers, clear spelling out the operational procedures and norms to be followed and the scope of work between the dealer and Voltas.

Voltas set aside 1 per cent of its turnover for training and development of its channel partners. Money was pumped into dealer infrastructure, manpower training (with certification programmes for all employees), sharing costs of mobile vans, cooperative ads and so on.

Says a Voltas marketing executive, "Dealer satisfaction is important as we are no longer into direct selling and servicing in the residential AC market. Unless they are satisfied, they can't satisfy the customer."

Changes were also made in the after-sales part of the business. Voltas's earlier model was of direct servicing where the company sent out its own AC engineers to attend to complaints. Now, it made the dealers responsible for customer care - and in one stroke, cut its workforce by more than a third, from 370 to 216.

Even the dealers have strict guidelines on interacting with customers and responding to complaints. How many servicemen are required, what kind of servicing kit is required, what spare parts must always be there, the dress code of a servicemen - everything is spelt out for the dealer.

Time targets - under four hours in the metros - have also been set for responding to customer calls. And since the dealers and the head office are connected through a SAP system, all transactions are online and transparent.

Brand building

When the Tata management laid down its ultimatum, Voltas knew it needed to focus on the demand for ACs in homes. While room AC sales were growing at 26 per cent, household penetration was a mere 2 per cent - the potential was tremendous.

Say Manglokar of AT Kearney, "A long relation with the consumers can have its pros and cons. In Voltas's case the cons were more. It lacked the freshness that the MNCs provided." Voltas's Java agrees. "The brand recall was poor and we had a fuddy-duddy image. The task at hand was to transform Dilip Kumar [ Images ] into Shah Rukh Khan [ Images ]."

To do that, Voltas began by switching ad agencies - from O&M to Euro RSG, which came up with a new positioning platform: "Acs with IQ." The ads focused on defining features of Voltas's new product range such as uniform cooling, energy-saving, timers and air filters, with cues of performance and value-addition through technological innovation.

The campaign kicked off with the Vertis flagship, and went on extend the "ACs with IQ" proposition to every Voltas AC. A series of print ads spelt out what was "intelligent" about the range.

Subsequent promotions have focused on themes like customer service and low costs of ownwership.  In 2004, Voltas changed its theme somewhat, staking claim to the aspirational product platform - campaigns focused on its new Rs 9,900 AC, a first in the market.  Celebrities like Shah Rukh Khan and Shoaib Akhtar [ Images ] were also roped in to strengthen the brand.

Of course, all this doesn't come cheap: between 2001 and 2004, Voltas invested more than Rs 50 crore (Rs 500 million) in branding initiatives; last year, it spent Rs 17 crore (Rs 170 million) on marketing.

The figure for this year is somewhat higher: Rs 20 crore (Rs 200 million). But then, the theme has changed too. Since the focus now is on capturing a larger share of the mass market, Voltas's new campaign is aimed at the aam aadmi, and has been shot in a distinctly non-urban environment. The tagline, too, has changed - Voltas is now "India ka AC".

Did it work?

Diversified revenue streams with significant contribution from rapidly growing Electro-mechanical projects and services business

Strong domestic market presence in retail and commercial air-conditioning business

Long experience and strong market position in the Middle East countries for Electro mechanical projects.

Strong franchise in all the businesses, amongst top players in most business segments

Strong risk management systems to manage project risks

Financial flexibility reflected in low gearing levels and unutilized bank lines, largely accruing from favourable working capital intensity of operations Credit Concerns

Slowdown in new order flows, including in Middle East markets

Competitive pressures impacting margin in projects business

Increasing scale of projects in the domestic market could be subject to execution risk pertaining to performance and delays

Retention of skilled man power critical for the projects

Increasing competition from low cost Korean and Chinese players in the domestic unitary cooling products business

Rating Rationale The reaffirmation of ratings takes into account strong revenue growth reported by Voltas’ Electromechanical Projects & Services (EMPS) business segment, maintenance of strong credit profile & efficient working capital management despite pressures in international markets, and stable revenue visibility supported

by current order book position. Voltas’ ratings continue to be supported by its established position in the Mechanical Electrical Plumbing (MEP) space in the domestic and certain Middle Eastern markets, its strong project-risk evaluation systems and well demonstrated execution capabilities. Large parts of Voltas’ businesses are prone to cyclical downturns and are likely to face weak demand environment over the medium term. Voltas also derives a significant part of its business from Middle East market, which is facing significant slowdown in construction related activities. Overall the business environment for many of its clients remains challenging in the medium term, which is likely to impact the profitability and working capital intensity of the company adversely. The ratings also factor in the intense competitive pressures in the cooling applications business. Voltas’ ratings are also underpinned by its strong parentage being part of Tata Group and its management’s sound investment and financial policies. Voltas is a diversified engineering and services company that offers engineering solutions to a wide spectrum of industries in the areas of heating, ventilation, air-conditioning, refrigeration, climate control, electro-mechanical projects, and building management systems. Besides, it also trades in textile machinery, material handling equipment, mining & construction equipment, and machine tools. The company has three major business groups: Electro-Mechanical Projects and Services (EMPS) Group; Unitary Cooling Products Business Group (UCPBG) and Engineering Products and Services Business Group (EPBG). The EMPS business of Voltas (around 64% of its net sales in 2008-09) consists of two main business groups: Air Conditioning & Refrigeration Business Group (AC&R BG) and International Operations Business Group (IOBG). The AC&R BG manufactures air conditioning equipment for large, central air conditioning plants and undertakes project execution and maintenance of entire HVAC (Heating, Ventilation and Air Conditioning) plants in India. In 2008-09, this business reported growth of about 80% following increase in orders from the service sector, including users such as multiplexes, shopping malls, information technology (IT) parks, banks and others. Though since Q3 FY09, new order inflows have reduced, the company continues to have high visibility over short to medium

term based on its existing order book. The division has also been recently awarded two airports projects worth Rs. 3,100 million, which are expected to be executed over the next 21-24 months. The IOBG, on its part, undertakes mechanical, electrical and plumbing (MEP) contracts, as a sub-contractor or main contractor in large commercial construction projects in and outside India. Currently, this group is operating mostly in the Middle East (The United Arab Emirates, Qatar, and Bahrain) and Far East (Singapore and Hong Kong). Voltas is focussing on diversifying its business model with inclusion of water management projects and MEP projects for industrial sectors. During the year, the company acquired Rohini Industrial Electrical Limited (RIEL), a turnkey electrical and instrumentation contracting company in its efforts to enhance its scope of work. Voltas acquired 51% stake for a consideration of Rs. 614 million and intends to increase its stake to 100% over the next three years. ICRA Credit Perspective Voltas Limited ICRA Rating Services Page 3

As for IOBG, growth is expected to come from greater geographic penetration and also participation in bigger contracts, going forward. In the international business as well, Voltas has witnessed slowdown in new order inflows, however, visibility over next 1-2 years remains stable with over Rs. 37 billion of current order book yet to be executed. As part of its strategy, the company is focussing on either Government sponsored/supported projects in the international market to mitigate risk arising from cancellation of orders and delay in payments. The UCPBG (accounting for 23% of Voltas’ net sales in 2008-09) is into cooling applications such as room air-conditioners, water coolers, water dispensers, and commercial refrigeration products such as chest freezers, chest coolers, and Visi coolers. This has traditionally been the public face of Voltas over the years. The company has a presence throughout the country through its strong network of dealers, retail outlets, and franchisees. While the company has discontinued the manufacture of domestic refrigerators, it shifted its commercial refrigerator machinery to a new facility at Pantnagar (Uttaranchal), which enjoys excise benefits. The division posted improvement in performance during FY08 and FY09 on account of the increase in sale volumes across segments, price increase, improvement in product mix and efficiency improvement, closure of ailing Dadra unit and sharing of overheads in the Pantnagar unit with water cooling plant. During FY09, the Indian air conditioner industry witnessed an unanticipated slowdown in growth, from 28% (in FY08) to 7% (in FY09, Source: company), resulting in high inventory levels in the industry. Voltas’ room air conditioner sales grew by 35.4% in volume terms well above the industry average of 7%. Increased reach in semi-urban and rural markets through expansion of dealer network and introduction of new products have been the key reasons supporting Voltas’ growth in this segment. The EPBG (accounting for 13% of Voltas’ net sales in 2008-09) is engaged in trading in textile machines, machine tools and construction & mining equipment, which cater to textile, automobile and construction industry. Voltas operates as dealers for various domestic and international companies like Lakshmi Machine Works (LMW) for textile machines; Hauser, Tornos and LMW for machine tools; and Terex for construction

and mining equipment. Voltas also has a material handling equipment and services business that involves manufacture of equipment like forklift trucks and hydraulic cranes. While all these businesses have shown promising growth during the previous two years, driven by the positive developments in the industries they service, overall scenario changed sharply post Q2 FY09 on back of sharp decline in demand from all end-user segments. As a result of sharp slowdown, EPBG witnessed high inventory levels leading to increase in working capital requirement and reduction in margins on account of carrying cost. Over the past three quarters, Voltas has been working on reducing inventory levels in this division, which increased from 44 days (In FY08) to 103 days (in FY09). With change in business environment, Voltas is reducing its working capital engagement in the business by maintaining lower inventory levels, sourcing against firm orders and focussing on cash-n-carry model. Voltas’ operating income grew around 32% in 2008-09 over the previous fiscal, benefiting from the strong growth reported by the EMPS and UCPBG businesses. The extraordinary gain on account of sale on property and chemical business provided an impetus to the bottom line of the company. With significant increase in projects under execution in EMPS (as reflected by work in progress) and higher inventory levels (in EPBG), Voltas’ working capital requirements increased substantially in FY09. Despite increase in borrowings to support higher working capital requirements, Voltas’ gearing continues to remain comfortable at 0.18x as on March 09. Despite increase in capital employed, the company continues to benefit from lean working capital intensity of its operations, modest capital expenditure requirements, healthy cash generation, and reasonable cash balance & liquid investments. Voltas has strong coverage indicators with Net Cash Accrual to Total Debt position of 161%. The company is expected to be able to maintain its favourable financial profile in the short to medium term, despite expected increase in working capital requirements (increased receivables), slowdown in order flows and investments in subsidiary companies. Company Profile Voltas is part of the Tata Group, which holds a 27.3% stake in the company. The company operates in three main business

segments: Electro Mechanical Projects and Services (EMPS), Engineering Products Business (EPBG) and Unitary Products Business (UPBG). The EMPS business provides solutions for centralized air-conditioning and refrigeration, electrical, mechanical, HVAC (heating, ventilation and air conditioning) applications, plumbing and water management services in domestic and international markets. The EPBG business markets manufactured and traded products and provides after sales services for machine tools, mining & construction equipment, material handling, and textile machinery segment. The UPBG business markets air-conditioners, water coolers and commercial refrigeration products. Voltas has predominantly been an air conditioning and refrigeration (AC&R) company in the past. However, over the years, the company has posted significant growth in the EMPS business, which along with the AC&R business accounted for about 63% of the net sales of the company in FY 09. The International ICRA Credit Perspective Voltas Limited ICRA Rating Services Page 4

operation business was created especially under EMPS to grow the international business of the company. Over the years, the company has established its name in turnkey projects involving electro-mechanical works and undertaken several large projects in 30 countries worldwide, particularly in West Asia. Over the last few years, Voltas has focused on cost cutting via manpower reduction (in manufacturing), besides divestment from non-productive real estate, manufacturing units, and non-core businesses. Business Risk Profile Voltas is an engineering company involved in manufacture and project execution of commercial air conditioning projects. The company also manufactures and markets room ACs and other engineering products in material handling, construction and textile machinery domains. The company operates in three business segments – Electromechanical Projects and & Services – Engaged in designing , manufacturing and installing central AC plants, and execution of electrical and plumbing services under MEP projects. Engineering Products & Services – Manufactures and markets forklifts (material handling equipment), truck cranes, spinning machines, and offers machines tools to capital goods sector. Unitary Cooling Products – Manufactures and markets split and window air conditioners, water coolers, and dispensers, and also executes commercial refrigeration work. Table 1: Voltas’s Business Structure Parameter Electromech

anical Projects

Engineering Products & Services

Unitary Cooling Products

Nature of Business

Project Business

Product Business (largely trading and services)

Product Business (manufacturing and services)

Services & Product

HVAC, Electrical & Public Health systems

Forklifts, Mini Excavators, Crushing, Cranes, Spinning

Split & Window ACs, water coolers and dispensers,

machines etc. freezers etc. Contribution to Sales

63% (in FY09) 54% (in FY08)

13% (in FY09) 17% (in FY08)

23% (in FY09) 26% (in FY08)

PBIT Margin (%)

7.6% (in FY09) 6.7% (in FY08)

11.6% (in FY09) 20.5% (in FY08)

7.4% (in FY09) 6.7% (in FY08)

Diversified revenue streams with significant contribution from rapidly growing Electro-mechanical projects and services business

Strong domestic market presence in retail and commercial air-conditioning business

Long experience and strong market position in the Middle East countries for Electro mechanical projects.

Strong franchise in all the businesses, amongst top players in most business segments

Strong risk management systems to manage project risks

Financial flexibility reflected in low gearing levels and unutilized bank lines, largely accruing from favourable working capital intensity of operations Credit Concerns

Slowdown in new order flows, including in Middle East markets

Competitive pressures impacting margin in projects business

Increasing scale of projects in the domestic market could be subject to execution risk pertaining to performance and delays

Retention of skilled man power critical for the projects

Increasing competition from low cost Korean and Chinese players in the domestic unitary cooling products business

Rating Rationale The reaffirmation of ratings takes into account strong revenue growth reported by Voltas’ Electromechanical Projects & Services (EMPS) business segment, maintenance of strong credit profile & efficient working capital management despite pressures in international markets, and stable revenue visibility supported by current order book position. Voltas’ ratings continue to be supported by its established position in the Mechanical Electrical Plumbing (MEP) space in the domestic and certain Middle Eastern markets, its strong project-risk evaluation systems and well demonstrated execution capabilities. Large parts of Voltas’ businesses are prone to cyclical downturns and are likely to face weak demand environment over the medium term. Voltas also derives a significant part of its business from Middle East market, which is facing significant slowdown in construction related activities. Overall the business environment for many of its clients remains challenging in the medium term, which is likely to impact the profitability and working capital intensity of the company adversely. The ratings also factor in the intense competitive pressures in the cooling applications business. Voltas’ ratings are also underpinned by its strong parentage being part of Tata Group and its management’s sound investment and financial policies. Voltas is a diversified engineering and services company that offers engineering solutions to a wide spectrum of industries in the areas of heating, ventilation, air-conditioning, refrigeration, climate control, electro-mechanical projects, and building management systems. Besides, it also trades in textile machinery, material handling equipment, mining & construction equipment, and machine tools. The company has three major business groups: Electro-Mechanical Projects and Services (EMPS) Group; Unitary Cooling Products Business Group (UCPBG) and Engineering Products and Services Business Group (EPBG). The EMPS business of Voltas (around 64% of its net sales in 2008-09) consists of two main business groups: Air Conditioning & Refrigeration Business Group (AC&R BG) and International Operations Business Group (IOBG). The AC&R BG manufactures air conditioning equipment for large, central air conditioning plants and undertakes project execution and

maintenance of entire HVAC (Heating, Ventilation and Air Conditioning) plants in India. In 2008-09, this business reported growth of about 80% following increase in orders from the service sector, including users such as multiplexes, shopping malls, information technology (IT) parks, banks and others. Though since Q3 FY09, new order inflows have reduced, the company continues to have high visibility over short to medium term based on its existing order book. The division has also been recently awarded two airports projects worth Rs. 3,100 million, which are expected to be executed over the next 21-24 months. The IOBG, on its part, undertakes mechanical, electrical and plumbing (MEP) contracts, as a sub-contractor or main contractor in large commercial construction projects in and outside India. Currently, this group is operating mostly in the Middle East (The United Arab Emirates, Qatar, and Bahrain) and Far East (Singapore and Hong Kong). Voltas is focussing on diversifying its business model with inclusion of water management projects and MEP projects for industrial sectors. During the year, the company acquired Rohini Industrial Electrical Limited (RIEL), a turnkey electrical and instrumentation contracting company in its efforts to enhance its scope of work. Voltas acquired 51% stake for a consideration of Rs. 614 million and intends to increase its stake to 100% over the next three years. ICRA Credit Perspective Voltas Limited ICRA Rating Services Page 3

As for IOBG, growth is expected to come from greater geographic penetration and also participation in bigger contracts, going forward. In the international business as well, Voltas has witnessed slowdown in new order inflows, however, visibility over next 1-2 years remains stable with over Rs. 37 billion of current order book yet to be executed. As part of its strategy, the company is focussing on either Government sponsored/supported projects in the international market to mitigate risk arising from cancellation of orders and delay in payments. The UCPBG (accounting for 23% of Voltas’ net sales in 2008-09) is into cooling applications such as room air-conditioners, water coolers, water dispensers, and commercial refrigeration products such as chest freezers, chest coolers, and Visi coolers. This has traditionally been the public face of Voltas over the years. The company has a presence throughout the country through its strong network of dealers, retail outlets, and franchisees. While the company has discontinued the manufacture of domestic refrigerators, it shifted its commercial refrigerator machinery to a new facility at Pantnagar (Uttaranchal), which enjoys excise benefits. The division posted improvement in performance during FY08 and FY09 on account of the increase in sale volumes across segments, price increase, improvement in product mix and efficiency improvement, closure of ailing Dadra unit and sharing of overheads in the Pantnagar unit with water cooling plant. During FY09, the Indian air conditioner industry witnessed an unanticipated slowdown in growth, from 28% (in FY08) to 7% (in FY09, Source: company), resulting in high inventory levels in the industry. Voltas’ room air conditioner sales grew by 35.4% in volume terms well above the industry average of 7%. Increased reach in semi-urban and rural markets through expansion of dealer network and introduction of new products have been the key reasons supporting Voltas’ growth in this segment. The EPBG (accounting for 13% of Voltas’ net sales in 2008-09) is engaged in trading in textile machines, machine tools and construction & mining equipment, which cater to textile, automobile and construction industry. Voltas operates as dealers for various domestic and international companies like Lakshmi Machine Works (LMW) for textile machines; Hauser, Tornos and LMW for machine tools; and Terex for construction

and mining equipment. Voltas also has a material handling equipment and services business that involves manufacture of equipment like forklift trucks and hydraulic cranes. While all these businesses have shown promising growth during the previous two years, driven by the positive developments in the industries they service, overall scenario changed sharply post Q2 FY09 on back of sharp decline in demand from all end-user segments. As a result of sharp slowdown, EPBG witnessed high inventory levels leading to increase in working capital requirement and reduction in margins on account of carrying cost. Over the past three quarters, Voltas has been working on reducing inventory levels in this division, which increased from 44 days (In FY08) to 103 days (in FY09). With change in business environment, Voltas is reducing its working capital engagement in the business by maintaining lower inventory levels, sourcing against firm orders and focussing on cash-n-carry model. Voltas’ operating income grew around 32% in 2008-09 over the previous fiscal, benefiting from the strong growth reported by the EMPS and UCPBG businesses. The extraordinary gain on account of sale on property and chemical business provided an impetus to the bottom line of the company. With significant increase in projects under execution in EMPS (as reflected by work in progress) and higher inventory levels (in EPBG), Voltas’ working capital requirements increased substantially in FY09. Despite increase in borrowings to support higher working capital requirements, Voltas’ gearing continues to remain comfortable at 0.18x as on March 09. Despite increase in capital employed, the company continues to benefit from lean working capital intensity of its operations, modest capital expenditure requirements, healthy cash generation, and reasonable cash balance & liquid investments. Voltas has strong coverage indicators with Net Cash Accrual to Total Debt position of 161%. The company is expected to be able to maintain its favourable financial profile in the short to medium term, despite expected increase in working capital requirements (increased receivables), slowdown in order flows and investments in subsidiary companies. Company Profile Voltas is part of the Tata Group, which holds a 27.3% stake in the company. The company operates in three main business

segments: Electro Mechanical Projects and Services (EMPS), Engineering Products Business (EPBG) and Unitary Products Business (UPBG). The EMPS business provides solutions for centralized air-conditioning and refrigeration, electrical, mechanical, HVAC (heating, ventilation and air conditioning) applications, plumbing and water management services in domestic and international markets. The EPBG business markets manufactured and traded products and provides after sales services for machine tools, mining & construction equipment, material handling, and textile machinery segment. The UPBG business markets air-conditioners, water coolers and commercial refrigeration products. Voltas has predominantly been an air conditioning and refrigeration (AC&R) company in the past. However, over the years, the company has posted significant growth in the EMPS business, which along with the AC&R business accounted for about 63% of the net sales of the company in FY 09. The International ICRA Credit Perspective Voltas Limited ICRA Rating Services Page 4

operation business was created especially under EMPS to grow the international business of the company. Over the years, the company has established its name in turnkey projects involving electro-mechanical works and undertaken several large projects in 30 countries worldwide, particularly in West Asia. Over the last few years, Voltas has focused on cost cutting via manpower reduction (in manufacturing), besides divestment from non-productive real estate, manufacturing units, and non-core businesses. Business Risk Profile Voltas is an engineering company involved in manufacture and project execution of commercial air conditioning projects. The company also manufactures and markets room ACs and other engineering products in material handling, construction and textile machinery domains. The company operates in three business segments – Electromechanical Projects and & Services – Engaged in designing , manufacturing and installing central AC plants, and execution of electrical and plumbing services under MEP projects. Engineering Products & Services – Manufactures and markets forklifts (material handling equipment), truck cranes, spinning machines, and offers machines tools to capital goods sector. Unitary Cooling Products – Manufactures and markets split and window air conditioners, water coolers, and dispensers, and also executes commercial refrigeration work. Table 1: Voltas’s Business Structure Parameter Electromech

anical Projects

Engineering Products & Services

Unitary Cooling Products

Nature of Business

Project Business

Product Business (largely trading and services)

Product Business (manufacturing and services)

Services & Product

HVAC, Electrical & Public Health systems

Forklifts, Mini Excavators, Crushing, Cranes, Spinning

Split & Window ACs, water coolers and dispensers,

machines etc. freezers etc. Contribution to Sales

63% (in FY09) 54% (in FY08)

13% (in FY09) 17% (in FY08)

23% (in FY09) 26% (in FY08)

PBIT Margin (%)

7.6% (in FY09) 6.7% (in FY08)

11.6% (in FY09) 20.5% (in FY08)

7.4% (in FY09) 6.7% (in FY08)

Diversified revenue streams with significant contribution from rapidly growing Electro-mechanical projects and services business

Strong domestic market presence in retail and commercial air-conditioning business

Long experience and strong market position in the Middle East countries for Electro mechanical projects.

Strong franchise in all the businesses, amongst top players in most business segments

Strong risk management systems to manage project risks

Financial flexibility reflected in low gearing levels and unutilized bank lines, largely accruing from favourable working capital intensity of operations Credit Concerns

Slowdown in new order flows, including in Middle East markets

Competitive pressures impacting margin in projects business

Increasing scale of projects in the domestic market could be subject to execution risk pertaining to performance and delays

Retention of skilled man power critical for the projects

Increasing competition from low cost Korean and Chinese players in the domestic unitary cooling products business

Rating Rationale The reaffirmation of ratings takes into account strong revenue growth reported by Voltas’ Electromechanical Projects & Services (EMPS) business segment, maintenance of strong credit profile & efficient working capital management despite pressures in international markets, and stable revenue visibility supported by current order book position. Voltas’ ratings continue to be supported by its established position in the Mechanical Electrical Plumbing (MEP) space in the domestic and certain Middle Eastern markets, its strong project-risk evaluation systems and well demonstrated execution capabilities. Large parts of Voltas’ businesses are prone to cyclical downturns and are likely to face weak demand environment over the medium term. Voltas also derives a significant part of its business from Middle East market, which is facing significant slowdown in construction related activities. Overall the business environment for many of its clients remains challenging in the medium term, which is likely to impact the profitability and working capital intensity of the company adversely. The ratings also factor in the intense competitive pressures in the cooling applications business. Voltas’ ratings are also underpinned by its strong parentage being part of Tata Group and its management’s sound investment and financial policies. Voltas is a diversified engineering and services company that offers engineering solutions to a wide spectrum of industries in the areas of heating, ventilation, air-conditioning, refrigeration, climate control, electro-mechanical projects, and building management systems. Besides, it also trades in textile machinery, material handling equipment, mining & construction equipment, and machine tools. The company has three major business groups: Electro-Mechanical Projects and Services (EMPS) Group; Unitary Cooling Products Business Group (UCPBG) and Engineering Products and Services Business Group (EPBG). The EMPS business of Voltas (around 64% of its net sales in 2008-09) consists of two main business groups: Air Conditioning & Refrigeration Business Group (AC&R BG) and International Operations Business Group (IOBG). The AC&R BG manufactures air conditioning equipment for large, central air conditioning plants and undertakes project execution and

maintenance of entire HVAC (Heating, Ventilation and Air Conditioning) plants in India. In 2008-09, this business reported growth of about 80% following increase in orders from the service sector, including users such as multiplexes, shopping malls, information technology (IT) parks, banks and others. Though since Q3 FY09, new order inflows have reduced, the company continues to have high visibility over short to medium term based on its existing order book. The division has also been recently awarded two airports projects worth Rs. 3,100 million, which are expected to be executed over the next 21-24 months. The IOBG, on its part, undertakes mechanical, electrical and plumbing (MEP) contracts, as a sub-contractor or main contractor in large commercial construction projects in and outside India. Currently, this group is operating mostly in the Middle East (The United Arab Emirates, Qatar, and Bahrain) and Far East (Singapore and Hong Kong). Voltas is focussing on diversifying its business model with inclusion of water management projects and MEP projects for industrial sectors. During the year, the company acquired Rohini Industrial Electrical Limited (RIEL), a turnkey electrical and instrumentation contracting company in its efforts to enhance its scope of work. Voltas acquired 51% stake for a consideration of Rs. 614 million and intends to increase its stake to 100% over the next three years. ICRA Credit Perspective Voltas Limited ICRA Rating Services Page 3

As for IOBG, growth is expected to come from greater geographic penetration and also participation in bigger contracts, going forward. In the international business as well, Voltas has witnessed slowdown in new order inflows, however, visibility over next 1-2 years remains stable with over Rs. 37 billion of current order book yet to be executed. As part of its strategy, the company is focussing on either Government sponsored/supported projects in the international market to mitigate risk arising from cancellation of orders and delay in payments. The UCPBG (accounting for 23% of Voltas’ net sales in 2008-09) is into cooling applications such as room air-conditioners, water coolers, water dispensers, and commercial refrigeration products such as chest freezers, chest coolers, and Visi coolers. This has traditionally been the public face of Voltas over the years. The company has a presence throughout the country through its strong network of dealers, retail outlets, and franchisees. While the company has discontinued the manufacture of domestic refrigerators, it shifted its commercial refrigerator machinery to a new facility at Pantnagar (Uttaranchal), which enjoys excise benefits. The division posted improvement in performance during FY08 and FY09 on account of the increase in sale volumes across segments, price increase, improvement in product mix and efficiency improvement, closure of ailing Dadra unit and sharing of overheads in the Pantnagar unit with water cooling plant. During FY09, the Indian air conditioner industry witnessed an unanticipated slowdown in growth, from 28% (in FY08) to 7% (in FY09, Source: company), resulting in high inventory levels in the industry. Voltas’ room air conditioner sales grew by 35.4% in volume terms well above the industry average of 7%. Increased reach in semi-urban and rural markets through expansion of dealer network and introduction of new products have been the key reasons supporting Voltas’ growth in this segment. The EPBG (accounting for 13% of Voltas’ net sales in 2008-09) is engaged in trading in textile machines, machine tools and construction & mining equipment, which cater to textile, automobile and construction industry. Voltas operates as dealers for various domestic and international companies like Lakshmi Machine Works (LMW) for textile machines; Hauser, Tornos and LMW for machine tools; and Terex for construction

and mining equipment. Voltas also has a material handling equipment and services business that involves manufacture of equipment like forklift trucks and hydraulic cranes. While all these businesses have shown promising growth during the previous two years, driven by the positive developments in the industries they service, overall scenario changed sharply post Q2 FY09 on back of sharp decline in demand from all end-user segments. As a result of sharp slowdown, EPBG witnessed high inventory levels leading to increase in working capital requirement and reduction in margins on account of carrying cost. Over the past three quarters, Voltas has been working on reducing inventory levels in this division, which increased from 44 days (In FY08) to 103 days (in FY09). With change in business environment, Voltas is reducing its working capital engagement in the business by maintaining lower inventory levels, sourcing against firm orders and focussing on cash-n-carry model. Voltas’ operating income grew around 32% in 2008-09 over the previous fiscal, benefiting from the strong growth reported by the EMPS and UCPBG businesses. The extraordinary gain on account of sale on property and chemical business provided an impetus to the bottom line of the company. With significant increase in projects under execution in EMPS (as reflected by work in progress) and higher inventory levels (in EPBG), Voltas’ working capital requirements increased substantially in FY09. Despite increase in borrowings to support higher working capital requirements, Voltas’ gearing continues to remain comfortable at 0.18x as on March 09. Despite increase in capital employed, the company continues to benefit from lean working capital intensity of its operations, modest capital expenditure requirements, healthy cash generation, and reasonable cash balance & liquid investments. Voltas has strong coverage indicators with Net Cash Accrual to Total Debt position of 161%. The company is expected to be able to maintain its favourable financial profile in the short to medium term, despite expected increase in working capital requirements (increased receivables), slowdown in order flows and investments in subsidiary companies. Company Profile Voltas is part of the Tata Group, which holds a 27.3% stake in the company. The company operates in three main business

segments: Electro Mechanical Projects and Services (EMPS), Engineering Products Business (EPBG) and Unitary Products Business (UPBG). The EMPS business provides solutions for centralized air-conditioning and refrigeration, electrical, mechanical, HVAC (heating, ventilation and air conditioning) applications, plumbing and water management services in domestic and international markets. The EPBG business markets manufactured and traded products and provides after sales services for machine tools, mining & construction equipment, material handling, and textile machinery segment. The UPBG business markets air-conditioners, water coolers and commercial refrigeration products. Voltas has predominantly been an air conditioning and refrigeration (AC&R) company in the past. However, over the years, the company has posted significant growth in the EMPS business, which along with the AC&R business accounted for about 63% of the net sales of the company in FY 09. The International ICRA Credit Perspective Voltas Limited ICRA Rating Services Page 4

operation business was created especially under EMPS to grow the international business of the company. Over the years, the company has established its name in turnkey projects involving electro-mechanical works and undertaken several large projects in 30 countries worldwide, particularly in West Asia. Over the last few years, Voltas has focused on cost cutting via manpower reduction (in manufacturing), besides divestment from non-productive real estate, manufacturing units, and non-core businesses. Business Risk Profile Voltas is an engineering company involved in manufacture and project execution of commercial air conditioning projects. The company also manufactures and markets room ACs and other engineering products in material handling, construction and textile machinery domains. The company operates in three business segments – Electromechanical Projects and & Services – Engaged in designing , manufacturing and installing central AC plants, and execution of electrical and plumbing services under MEP projects. Engineering Products & Services – Manufactures and markets forklifts (material handling equipment), truck cranes, spinning machines, and offers machines tools to capital goods sector. Unitary Cooling Products – Manufactures and markets split and window air conditioners, water coolers, and dispensers, and also executes commercial refrigeration work. Table 1: Voltas’s Business Structure Parameter Electromech

anical Projects

Engineering Products & Services

Unitary Cooling Products

Nature of Business

Project Business

Product Business (largely trading and services)

Product Business (manufacturing and services)

Services & Product

HVAC, Electrical & Public Health systems

Forklifts, Mini Excavators, Crushing, Cranes, Spinning

Split & Window ACs, water coolers and dispensers,

machines etc. freezers etc. Contribution to Sales

63% (in FY09) 54% (in FY08)

13% (in FY09) 17% (in FY08)

23% (in FY09) 26% (in FY08)

PBIT Margin (%)

7.6% (in FY09) 6.7% (in FY08)

11.6% (in FY09) 20.5% (in FY08)

7.4% (in FY09) 6.7% (in FY08)

Diversified revenue streams with significant contribution from rapidly growing Electro-mechanical projects and services business

Strong domestic market presence in retail and commercial air-conditioning business

Long experience and strong market position in the Middle East countries for Electro mechanical projects.

Strong franchise in all the businesses, amongst top players in most business segments

Strong risk management systems to manage project risks

Financial flexibility reflected in low gearing levels and unutilized bank lines, largely accruing from favourable working capital intensity of operations Credit Concerns

Slowdown in new order flows, including in Middle East markets

Competitive pressures impacting margin in projects business

Increasing scale of projects in the domestic market could be subject to execution risk pertaining to performance and delays

Retention of skilled man power critical for the projects

Increasing competition from low cost Korean and Chinese players in the domestic unitary cooling products business

Rating Rationale The reaffirmation of ratings takes into account strong revenue growth reported by Voltas’ Electromechanical Projects & Services (EMPS) business segment, maintenance of strong credit profile & efficient working capital management despite pressures in international markets, and stable revenue visibility supported by current order book position. Voltas’ ratings continue to be supported by its established position in the Mechanical Electrical Plumbing (MEP) space in the domestic and certain Middle Eastern markets, its strong project-risk evaluation systems and well demonstrated execution capabilities. Large parts of Voltas’ businesses are prone to cyclical downturns and are likely to face weak demand environment over the medium term. Voltas also derives a significant part of its business from Middle East market, which is facing significant slowdown in construction related activities. Overall the business environment for many of its clients remains challenging in the medium term, which is likely to impact the profitability and working capital intensity of the company adversely. The ratings also factor in the intense competitive pressures in the cooling applications business. Voltas’ ratings are also underpinned by its strong parentage being part of Tata Group and its management’s sound investment and financial policies. Voltas is a diversified engineering and services company that offers engineering solutions to a wide spectrum of industries in the areas of heating, ventilation, air-conditioning, refrigeration, climate control, electro-mechanical projects, and building management systems. Besides, it also trades in textile machinery, material handling equipment, mining & construction equipment, and machine tools. The company has three major business groups: Electro-Mechanical Projects and Services (EMPS) Group; Unitary Cooling Products Business Group (UCPBG) and Engineering Products and Services Business Group (EPBG). The EMPS business of Voltas (around 64% of its net sales in 2008-09) consists of two main business groups: Air Conditioning & Refrigeration Business Group (AC&R BG) and International Operations Business Group (IOBG). The AC&R BG

manufactures air conditioning equipment for large, central air conditioning plants and undertakes project execution and maintenance of entire HVAC (Heating, Ventilation and Air Conditioning) plants in India. In 2008-09, this business reported growth of about 80% following increase in orders from the service sector, including users such as multiplexes, shopping malls, information technology (IT) parks, banks and others. Though since Q3 FY09, new order inflows have reduced, the company continues to have high visibility over short to medium term based on its existing order book. The division has also been recently awarded two airports projects worth Rs. 3,100 million, which are expected to be executed over the next 21-24 months. The IOBG, on its part, undertakes mechanical, electrical and plumbing (MEP) contracts, as a sub-contractor or main contractor in large commercial construction projects in and outside India. Currently, this group is operating mostly in the Middle East (The United Arab Emirates, Qatar, and Bahrain) and Far East (Singapore and Hong Kong). Voltas is focussing on diversifying its business model with inclusion of water management projects and MEP projects for industrial sectors. During the year, the company acquired Rohini Industrial Electrical Limited (RIEL), a turnkey electrical and instrumentation contracting company in its efforts to enhance its scope of work. Voltas acquired 51% stake for a consideration of Rs. 614 million and intends to increase its stake to 100% over the next three years. ICRA Credit Perspective Voltas Limited ICRA Rating Services Page 3

As for IOBG, growth is expected to come from greater geographic penetration and also participation in bigger contracts, going forward. In the international business as well, Voltas has witnessed slowdown in new order inflows, however, visibility over next 1-2 years remains stable with over Rs. 37 billion of current order book yet to be executed. As part of its strategy, the company is focussing on either Government sponsored/supported projects in the international market to mitigate risk arising from cancellation of orders and delay in payments. The UCPBG (accounting for 23% of Voltas’ net sales in 2008-09) is into cooling applications such as room air-conditioners, water coolers, water dispensers, and commercial refrigeration products such as chest freezers, chest coolers, and Visi coolers. This has traditionally been the public face of Voltas over the years. The company has a presence throughout the country through its strong network of dealers, retail outlets, and franchisees. While the company has discontinued the manufacture of domestic refrigerators, it shifted its commercial refrigerator machinery to a new facility at Pantnagar (Uttaranchal), which enjoys excise benefits. The division posted improvement in performance during FY08 and FY09 on account of the increase in sale volumes across segments, price increase, improvement in product mix and efficiency improvement, closure of ailing Dadra unit and sharing of overheads in the Pantnagar unit with water cooling plant. During FY09, the Indian air conditioner industry witnessed an unanticipated slowdown in growth, from 28% (in FY08) to 7% (in FY09, Source: company), resulting in high inventory levels in the industry. Voltas’ room air conditioner sales grew by 35.4% in volume terms well above the industry average of 7%. Increased reach in semi-urban and rural markets through expansion of dealer network and introduction of new products have been the key reasons supporting Voltas’ growth in this segment. The EPBG (accounting for 13% of Voltas’ net sales in 2008-09) is engaged in trading in textile machines, machine tools and construction & mining equipment, which cater to textile, automobile and construction industry. Voltas operates as dealers for various domestic and international companies like Lakshmi Machine Works (LMW) for textile machines; Hauser, Tornos and LMW for machine tools; and Terex for construction

and mining equipment. Voltas also has a material handling equipment and services business that involves manufacture of equipment like forklift trucks and hydraulic cranes. While all these businesses have shown promising growth during the previous two years, driven by the positive developments in the industries they service, overall scenario changed sharply post Q2 FY09 on back of sharp decline in demand from all end-user segments. As a result of sharp slowdown, EPBG witnessed high inventory levels leading to increase in working capital requirement and reduction in margins on account of carrying cost. Over the past three quarters, Voltas has been working on reducing inventory levels in this division, which increased from 44 days (In FY08) to 103 days (in FY09). With change in business environment, Voltas is reducing its working capital engagement in the business by maintaining lower inventory levels, sourcing against firm orders and focussing on cash-n-carry model. Voltas’ operating income grew around 32% in 2008-09 over the previous fiscal, benefiting from the strong growth reported by the EMPS and UCPBG businesses. The extraordinary gain on account of sale on property and chemical business provided an impetus to the bottom line of the company. With significant increase in projects under execution in EMPS (as reflected by work in progress) and higher inventory levels (in EPBG), Voltas’ working capital requirements increased substantially in FY09. Despite increase in borrowings to support higher working capital requirements, Voltas’ gearing continues to remain comfortable at 0.18x as on March 09. Despite increase in capital employed, the company continues to benefit from lean working capital intensity of its operations, modest capital expenditure requirements, healthy cash generation, and reasonable cash balance & liquid investments. Voltas has strong coverage indicators with Net Cash Accrual to Total Debt position of 161%. The company is expected to be able to maintain its favourable financial profile in the short to medium term, despite expected increase in working capital requirements (increased receivables), slowdown in order flows and investments in subsidiary companies. Company Profile Voltas is part of the Tata Group, which holds a 27.3% stake in the company. The company operates in three main business

segments: Electro Mechanical Projects and Services (EMPS), Engineering Products Business (EPBG) and Unitary Products Business (UPBG). The EMPS business provides solutions for centralized air-conditioning and refrigeration, electrical, mechanical, HVAC (heating, ventilation and air conditioning) applications, plumbing and water management services in domestic and international markets. The EPBG business markets manufactured and traded products and provides after sales services for machine tools, mining & construction equipment, material handling, and textile machinery segment. The UPBG business markets air-conditioners, water coolers and commercial refrigeration products. Voltas has predominantly been an air conditioning and refrigeration (AC&R) company in the past. However, over the years, the company has posted significant growth in the EMPS business, which along with the AC&R business accounted for about 63% of the net sales of the company in FY 09. The International ICRA Credit Perspective Voltas Limited ICRA Rating Services Page 4

operation business was created especially under EMPS to grow the international business of the company. Over the years, the company has established its name in turnkey projects involving electro-mechanical works and undertaken several large projects in 30 countries worldwide, particularly in West Asia. Over the last few years, Voltas has focused on cost cutting via manpower reduction (in manufacturing), besides divestment from non-productive real estate, manufacturing units, and non-core businesses. Business Risk Profile Voltas is an engineering company involved in manufacture and project execution of commercial air conditioning projects. The company also manufactures and markets room ACs and other engineering products in material handling, construction and textile machinery domains. The company operates in three business segments – Electromechanical Projects and & Services – Engaged in designing , manufacturing and installing central AC plants, and execution of electrical and plumbing services under MEP projects. Engineering Products & Services – Manufactures and markets forklifts (material handling equipment), truck cranes, spinning machines, and offers machines tools to capital goods sector. Unitary Cooling Products – Manufactures and markets split and window air conditioners, water coolers, and dispensers, and also executes commercial refrigeration work. Table 1: Voltas’s Business Structure Parameter Electromech

anical Projects

Engineering Products & Services

Unitary Cooling Products

Nature of Business

Project Business

Product Business (largely trading and services)

Product Business (manufacturing and services)

Services & Product

HVAC, Electrical & Public Health systems

Forklifts, Mini Excavators, Crushing, Cranes, Spinning

Split & Window ACs, water coolers and dispensers,

machines etc. freezers etc. Contribution to Sales

63% (in FY09) 54% (in FY08)

13% (in FY09) 17% (in FY08)

23% (in FY09) 26% (in FY08)

PBIT Margin (%)

7.6% (in FY09) 6.7% (in FY08)

11.6% (in FY09) 20.5% (in FY08)

7.4% (in FY09) 6.7% (in FY08)

Diversified revenue streams with significant contribution from rapidly growing Electro-mechanical projects and services business

Strong domestic market presence in retail and commercial air-conditioning business

Long experience and strong market position in the Middle East countries for Electro mechanical projects.

Strong franchise in all the businesses, amongst top players in most business segments

Strong risk management systems to manage project risks

Financial flexibility reflected in low gearing levels and unutilized bank lines, largely accruing from favourable working capital intensity of operations Credit Concerns

Slowdown in new order flows, including in Middle East markets

Competitive pressures impacting margin in projects business

Increasing scale of projects in the domestic market could be subject to execution risk pertaining to performance and delays

Retention of skilled man power critical for the projects

Increasing competition from low cost Korean and Chinese players in the domestic unitary cooling products business

Rating Rationale The reaffirmation of ratings takes into account strong revenue growth reported by Voltas’ Electromechanical Projects & Services (EMPS) business segment, maintenance of strong credit profile & efficient working capital management despite pressures in international markets, and stable revenue visibility supported by current order book position. Voltas’ ratings continue to be supported by its established position in the Mechanical Electrical Plumbing (MEP) space in the domestic and certain Middle Eastern markets, its strong project-risk evaluation systems and well demonstrated execution capabilities. Large parts of Voltas’ businesses are prone to cyclical downturns and are likely to face weak demand environment over the medium term. Voltas also derives a significant part of its business from Middle East market, which is facing significant slowdown in construction related activities. Overall the business environment for many of its clients remains challenging in the medium term, which is likely to impact the profitability and working capital intensity of the company adversely. The ratings also factor in the intense competitive pressures in the cooling applications business. Voltas’ ratings are also underpinned by its strong parentage being part of Tata Group and its management’s sound investment and financial policies. Voltas is a diversified engineering and services company that offers engineering solutions to a wide spectrum of industries in the areas of heating, ventilation, air-conditioning, refrigeration, climate control, electro-mechanical projects, and building management systems. Besides, it also trades in textile machinery, material handling equipment, mining & construction equipment, and machine tools. The company has three major business groups: Electro-Mechanical Projects and Services (EMPS) Group; Unitary Cooling Products Business Group (UCPBG) and Engineering Products and Services Business Group (EPBG). The EMPS business of Voltas (around 64% of its net sales in 2008-09) consists of two main business groups: Air Conditioning & Refrigeration Business Group (AC&R BG) and International Operations Business Group (IOBG). The AC&R BG manufactures air conditioning equipment for large, central air conditioning plants and undertakes project execution and

maintenance of entire HVAC (Heating, Ventilation and Air Conditioning) plants in India. In 2008-09, this business reported growth of about 80% following increase in orders from the service sector, including users such as multiplexes, shopping malls, information technology (IT) parks, banks and others. Though since Q3 FY09, new order inflows have reduced, the company continues to have high visibility over short to medium term based on its existing order book. The division has also been recently awarded two airports projects worth Rs. 3,100 million, which are expected to be executed over the next 21-24 months. The IOBG, on its part, undertakes mechanical, electrical and plumbing (MEP) contracts, as a sub-contractor or main contractor in large commercial construction projects in and outside India. Currently, this group is operating mostly in the Middle East (The United Arab Emirates, Qatar, and Bahrain) and Far East (Singapore and Hong Kong). Voltas is focussing on diversifying its business model with inclusion of water management projects and MEP projects for industrial sectors. During the year, the company acquired Rohini Industrial Electrical Limited (RIEL), a turnkey electrical and instrumentation contracting company in its efforts to enhance its scope of work. Voltas acquired 51% stake for a consideration of Rs. 614 million and intends to increase its stake to 100% over the next three years. ICRA Credit Perspective Voltas Limited ICRA Rating Services Page 3

As for IOBG, growth is expected to come from greater geographic penetration and also participation in bigger contracts, going forward. In the international business as well, Voltas has witnessed slowdown in new order inflows, however, visibility over next 1-2 years remains stable with over Rs. 37 billion of current order book yet to be executed. As part of its strategy, the company is focussing on either Government sponsored/supported projects in the international market to mitigate risk arising from cancellation of orders and delay in payments. The UCPBG (accounting for 23% of Voltas’ net sales in 2008-09) is into cooling applications such as room air-conditioners, water coolers, water dispensers, and commercial refrigeration products such as chest freezers, chest coolers, and Visi coolers. This has traditionally been the public face of Voltas over the years. The company has a presence throughout the country through its strong network of dealers, retail outlets, and franchisees. While the company has discontinued the manufacture of domestic refrigerators, it shifted its commercial refrigerator machinery to a new facility at Pantnagar (Uttaranchal), which enjoys excise benefits. The division posted improvement in performance during FY08 and FY09 on account of the increase in sale volumes across segments, price increase, improvement in product mix and efficiency improvement, closure of ailing Dadra unit and sharing of overheads in the Pantnagar unit with water cooling plant. During FY09, the Indian air conditioner industry witnessed an unanticipated slowdown in growth, from 28% (in FY08) to 7% (in FY09, Source: company), resulting in high inventory levels in the industry. Voltas’ room air conditioner sales grew by 35.4% in volume terms well above the industry average of 7%. Increased reach in semi-urban and rural markets through expansion of dealer network and introduction of new products have been the key reasons supporting Voltas’ growth in this segment. The EPBG (accounting for 13% of Voltas’ net sales in 2008-09) is engaged in trading in textile machines, machine tools and construction & mining equipment, which cater to textile, automobile and construction industry. Voltas operates as dealers for various domestic and international companies like Lakshmi Machine Works (LMW) for textile machines; Hauser, Tornos and LMW for machine tools; and Terex for construction

and mining equipment. Voltas also has a material handling equipment and services business that involves manufacture of equipment like forklift trucks and hydraulic cranes. While all these businesses have shown promising growth during the previous two years, driven by the positive developments in the industries they service, overall scenario changed sharply post Q2 FY09 on back of sharp decline in demand from all end-user segments. As a result of sharp slowdown, EPBG witnessed high inventory levels leading to increase in working capital requirement and reduction in margins on account of carrying cost. Over the past three quarters, Voltas has been working on reducing inventory levels in this division, which increased from 44 days (In FY08) to 103 days (in FY09). With change in business environment, Voltas is reducing its working capital engagement in the business by maintaining lower inventory levels, sourcing against firm orders and focussing on cash-n-carry model. Voltas’ operating income grew around 32% in 2008-09 over the previous fiscal, benefiting from the strong growth reported by the EMPS and UCPBG businesses. The extraordinary gain on account of sale on property and chemical business provided an impetus to the bottom line of the company. With significant increase in projects under execution in EMPS (as reflected by work in progress) and higher inventory levels (in EPBG), Voltas’ working capital requirements increased substantially in FY09. Despite increase in borrowings to support higher working capital requirements, Voltas’ gearing continues to remain comfortable at 0.18x as on March 09. Despite increase in capital employed, the company continues to benefit from lean working capital intensity of its operations, modest capital expenditure requirements, healthy cash generation, and reasonable cash balance & liquid investments. Voltas has strong coverage indicators with Net Cash Accrual to Total Debt position of 161%. The company is expected to be able to maintain its favourable financial profile in the short to medium term, despite expected increase in working capital requirements (increased receivables), slowdown in order flows and investments in subsidiary companies. Company Profile Voltas is part of the Tata Group, which holds a 27.3% stake in the company. The company operates in three main business

segments: Electro Mechanical Projects and Services (EMPS), Engineering Products Business (EPBG) and Unitary Products Business (UPBG). The EMPS business provides solutions for centralized air-conditioning and refrigeration, electrical, mechanical, HVAC (heating, ventilation and air conditioning) applications, plumbing and water management services in domestic and international markets. The EPBG business markets manufactured and traded products and provides after sales services for machine tools, mining & construction equipment, material handling, and textile machinery segment. The UPBG business markets air-conditioners, water coolers and commercial refrigeration products. Voltas has predominantly been an air conditioning and refrigeration (AC&R) company in the past. However, over the years, the company has posted significant growth in the EMPS business, which along with the AC&R business accounted for about 63% of the net sales of the company in FY 09. The International ICRA Credit Perspective Voltas Limited ICRA Rating Services Page 4

operation business was created especially under EMPS to grow the international business of the company. Over the years, the company has established its name in turnkey projects involving electro-mechanical works and undertaken several large projects in 30 countries worldwide, particularly in West Asia. Over the last few years, Voltas has focused on cost cutting via manpower reduction (in manufacturing), besides divestment from non-productive real estate, manufacturing units, and non-core businesses. Business Risk Profile Voltas is an engineering company involved in manufacture and project execution of commercial air conditioning projects. The company also manufactures and markets room ACs and other engineering products in material handling, construction and textile machinery domains. The company operates in three business segments – Electromechanical Projects and & Services – Engaged in designing , manufacturing and installing central AC plants, and execution of electrical and plumbing services under MEP projects. Engineering Products & Services – Manufactures and markets forklifts (material handling equipment), truck cranes, spinning machines, and offers machines tools to capital goods sector. Unitary Cooling Products – Manufactures and markets split and window air conditioners, water coolers, and dispensers, and also executes commercial refrigeration work. Table 1: Voltas’s Business Structure Parameter Electromech

anical Projects

Engineering Products & Services

Unitary Cooling Products

Nature of Business

Project Business

Product Business (largely trading and services)

Product Business (manufacturing and services)

Services & Product

HVAC, Electrical & Public Health systems

Forklifts, Mini Excavators, Crushing, Cranes, Spinning

Split & Window ACs, water coolers and dispensers,

machines etc. freezers etc. Contribution to Sales

63% (in FY09) 54% (in FY08)

13% (in FY09) 17% (in FY08)

23% (in FY09) 26% (in FY08)

PBIT Margin (%)

7.6% (in FY09) 6.7% (in FY08)

11.6% (in FY09) 20.5% (in FY08)

7.4% (in FY09) 6.7% (in FY08)

AIR CONDITIONING

    Available in Window, Split and Ductable models.    Window and Split Acs are arketed under the Vertis brand name.    Air conditioners catering to the light commercial segment come under the Venture range of products that  includes Floor     Standing (Slimline), Cassette and Ductable Air Conditioners.    Supported by strong R&D and technical support team , the range encompasses comfort Air conditioning      products ( upto 5 TR cooling / heating capacity) which can meet the requirements of every customer/ market.      Air Conditioners are available in 230 V, 50/60 Hz, 1 Phase fitted with Reciprocating / Rotary compressors    suitable for T1 as well as T3 (Tropical) conditions    Product with other specifications can also be supplied

FOOD COOLING & STORAGE

Product in this category includes Chest Freezers, Chest Coolers, Visi Coolers, Upright Coolers,Choclate coolers etc.They are the first choice of leading Multi national companies in Food and beverages, Frozen foods , confectionaries industries in India and also gaining acceptance overseas. Dedicated R&D team works closely with clients to develop best of class standard products as well customized solutions to fit into client’s specific

need.

WATER COOLER & DISPENSERS

This category of products consist of sturdy range of stainless steel Water Coolers under TUSHAR brand and elegant range of Water Dispenser under MINIMAGIC brand. These products are ideally suited for large public places such as School, Colleges, places of worship, construction sites, and offices as well as in individual households.

Besides a wide range of products Voltas owes its success in all our overseas markets to the efficient and competent distribution & service network provided by our dedicated channel partners. Our channel partners are fully equipped to cater to the needs of institutional as well as retail buyers in their respective markets.Export operations team based in Mumbai & Dubai are geared to support the growing list of distributors as well as OEM customers across all overseas market.

Voltas is among India's leading air-conditioning, refrigeration and engineering services companies. Set up in 1954, its core competencies lie in air conditioning and cooling appliances and services. Voltas is India's largest supplier of engineering products and services for the textile machinery sector and is a major manufacturer of forklift trucks. It provides solutions in turnkey pumping projects for water, effluent and sewage treatment, and water pollution control. The company has ISO 9001-2000 certification and has executed projects in the Middle East, Southeast Asia, Central Asia, Africa and Europe. AREAS OF BUSINESS The company mainly operates in the following areas:   Heating, ventilation and air-conditioning (HVAC) solutions: Includes the entire range of mechanical, electrical

    and plumbing services for a diverse range of applications, spanning office complexes, airports, malls,     mercantile ships, atomic energy plants, IT parks, hospitals, etc.   Cooling appliances: Design, manufacture and marketing of a range of air conditioners and water coolers     for household and institutional use   Engineering products and services: Design, sourcing, installation, training, maintenance, etc of engineering    products and services in the fields of textile machinery, machine tools, mining and construction equipment     and materials handling equipment.   Chemicals: Import and distribution of an array of industrial, specialty and pharmaceutical chemicals, industrial     plastics and bulk drugs. The company also exports gelatine, ultramarine blue and agrochemicals. JOINT VENTURES, SUBSIDIARIES, ASSOCIATES Voltas's subsidiaries include Metrovol FZE, VIL Overseas Enterprises BV, Voice Antilles NV, Weathermaker, Jebel Ali (Dubai), Simto Investment Company and Auto Aircon (India). LOCATION Voltas has its head office in Mumbai and regional offices in several major cities in India. Its overseas offices are in Abu Dhabi (UAE), Hong Kong and Singapore. The company has factories at Thane (Maharashtra) and Pantnagar ( Uttarakhand) in India. Products : We are Air Conditioning and Engineering services provider. Our products and services includes:- Air Conditioners and Water Coolers: Products include window and split air conditioners, Sensicool air conditioners and water coolers.Commercial Refrigeration: Products include chest freezers, Deep freezers, upright coolers, visi-coolers, chest coolers.Air Conditioning and Refrigeration: Voltas has executed installations for different applications including, among others, naval warships and mercantile ships, pharmaceutical production plants, telecommunication and computer facilities, research laboratories,

atomic energy plants, power plants, hotels, information technology parks, Hospitals, Air ports, Metro Stations, Petrochemical Plants and many more diverse applications.Electro-Mechanical Projects: Voltas undertakes turnkey projects in the fields of heating, ventilation and air conditioning [ HVAC ], mechanical, public health, plumbing, electrical, building power and lighting, low current systems, fire fighting and safety systems, for airports, palaces, five-star hotels, convention centers, district cooling plants, defence establishments, research centres, techno parks, training centres, power stations, railways, hospitals, auditoriums, townships, pharmaceutical factories, textile factories.Water Management & Treatment: Voltas caters to the vital sector of water management through its principal activity, namely pumping and water treatment projects. Voltas today is established as a total solutions provider for turnkey pumping projects as well as for water, effluent and sewage treatment and water pollution control projects. Besides this, the company also offers a wide range of horizontal split casing pumps manufactured in its works near Mumbai.Textile Machinery: Voltas is the largest supplier of textile machinery in India.Mining and Construction Equipment: In conjunction with globally renowned manufacturers, Voltas offers its customers a comprehensive package - proven expertise, long experience, the world's best equipment, and value added product support services. The products offered are: Construction Equipment:- Stationary and Tracked crushing plants and equipments, Screening and conveyor system / equipments, Excavators and Loaders, Dozers, Pipe Layers, Motor Graders.Mining Equipment:- Electric mining shovels, Rigid Dump Trucks, Hydraulic shovels, Large capacity wheel Loaders, OTR Tyres.Materials Handling: Products include diesel engine driven forklift trucks, LPG driven forklift trucks, battery driven forklift trucks, and warehouse equipment.Chemicals Division: Primary activities are import, indent and distribution of various types of plastics, industrial specialty, fine chemicals and bulk drugs. Besides domestic focus, products like gelatine, ultramarine blue and a variety of agro chemicals are promoted in the export market.

Analyst & Advisor: Abhishek Jain

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