Voltas’ FY 05-06 net sales up by 32 per cent; operating profit up by 124 per cent; net profit up by 40 per cent
May 12, 2006

Board recommends 60 per cent dividend and split of shares

The board of directors of Voltas, a Tata enterprise, have today announced the audited financial results, including the consolidated financial results and segment report, for the year ended March 31, 2006.

The directors have recommended a dividend of 60 per cent for the year ended March 31, 2006 (previous year 35 per cent and a special golden jubilee dividend of 15 per cent), on the equity shares of Rs10 each of the company. The directors have also recommended split of shares of face value of Rs 10/- each into 10 shares of face value of Re1/- each, subject to requisite approvals in respect thereof.

Highlights for the year ended March 31, 2006

• Net sales / income from operations at Rs 1,904.18 crore, up by 32 per cent year-on-year;
• Operating profit at Rs 117.88 crore, up by 124 per cent year-on-year;
• Profit after tax at Rs 70.49 crore, up by 40 per cent year-on-year after exceptional expenses of Rs 26.19 crore;
• EPS at Rs 21.30;
• Consolidated revenues at Rs 2022.71 crore, up by 30 per cent;
• Total order-book at Rs 2,035.90 crore, up by 54 per cent.
  

Year ended March 31, 2006
The company’s net sales / income from operations rose by 32 per cent to Rs 1,904.18 crore in the year under review, as compared to Rs 1,441.43 crore in the previous year. Operating profit (profit before tax and exceptional items) rose by 124 per cent to Rs 1,17.88 crore as compared to Rs 52.62 crore in the previous year. Profit after tax rose by 40 per cent to Rs 70.49 crore as against Rs 50.41 crore in the previous year. Earnings per share works out to Rs 21.30. It is noteworthy that the company has achieved a 40 per cent increase in the earnings per share despite having taken a substantial charge for VRS of Rs 65 crore at the Hyderabad plant. This exceptional expenditure itself works out to nearly Rs 20 per share. The charge on account of income tax has also increased.

Announcing the results, M M Miyajiwala, executive vice president (finance) and CFO, said, "The present economic uptrend and the company’s agility in responding to its challenges and opportunities are driving growth in most of our businesses. With the restructuring well in place and a robust order book position, the company has confidence that a strong growth trajectory will be maintained as we go forward. Apart from the growth, the biggest achievement of the year was the settlement with the union at Hyderabad plant for closure. This will substantially help the company’s growth in the future. The focus on stream lining processes, cost and financial management has also helped in the growth of profitability."

The company’s electro-mechanical projects and services segment grew by 51 per cent. The order book (as on March 31, 2006) stands at about Rs 1,850 crore compared to Rs 1,236 crore in the same period last year. The domestic orders included large HVAC projects: TCS (Rs 60 crore), Ambience Developers (Rs 39 crore), many major airport projects and several important power plants in India.

International orders included a string of prestigious contracts in Abu Dhabi, Bahrain and Dubai, among others. These consist largely of projects with long gestation periods and work has already commenced on these projects. The projects are expected to yield revenues in the latter half of the current financial year. To maintain consistent growth in these circumstances, the Company is focusing on enhancing growth in its other businesses.

The engineering products and services segment registered growth of 58 per cent. Textile machinery business notched 45 per cent growth in equipment sales, while materials handling business showed 52 per cent growth in sales volume of forklifts. Mining and construction equipment business sustained its upward trend.

The unitary products business pursued an aggressive sales and marketing strategy, resulting in 43 per cent growth in air conditioner sales over the previous year, including 73 per cent growth in the split AC segment. Market share in air conditioners improved by 2 per cent. Water coolers and dispensers sales grew by 45 per cent, while commercial refrigeration sales increased by 25 per cent.

To meet the pressures of present and future demand, the company is in the process of expanding its manufacturing capacity by setting up two plants in Uttaranchal. One unit will be dedicated to air conditioning central plant equipment and the other to water coolers, commercial refrigerators and speciality air conditioners. The location will offer substantial cost advantages, include excise benefits.

Quarter ended March 31, 2006
The company’s net sales / income from operations rose by 6.15 per cent, to Rs 530.45 crore for the quarter ended March 31, 2006, as compared to Rs 499.70 crore in the same period last year. Operating profit (profit before tax and exceptional items) rose by 67 per cent to Rs 36.72 crore as against Rs 21.97 crore in the same period last year. Profit after tax rose by 4 per cent to Rs 23.73 crore as against Rs 22.83 crore in the same period last year.