voltas Management discussions
GLOBAL ECONOMY
Despite witnessing major challenges in 2022—Omicron, conflict between Russia and Ukraine, extraordinary global monetary tightening, and the China slowdown—the global economy did better than expected. The Euro area steered clear of deep economic contraction while the US economy remained more resilient than expected. Strong private sector balance sheets provided a meaningful buffer against a significant downturn in 2022.
Looking ahead, the global economy will remain fragile in the next fiscal. As per IMFs latest World Economic Outlook report (April 2023), global growth is expected to moderate to 2.8% in 2023 from an estimated 3.4% in 2022.
Emerging markets (EM) are set to outperform developed markets (DM) in 2023, following two years of developed market outperformance. EM outperformance is expected to be led by a recovery in China on the back of its exit from its zero-Covid policy and relatively strong growth in India and Indonesia, supported by domestic demand.
Most DM central banks raised policy rates at an unprecedented pace in 2022. The US Federal Reserve raised the policy rate by a cumulative 425 bps to 4.25% - 4.50% in 2022, the fastest pace of tightening since the early 1970s. As the inflation peaks, major DM central banks are expected to slow their pace of rate hikes. That said, as inflation is expected to remain above central banks targets, policy rates will remain higher for longer.
INDIAN ECONOMY
As per IMFs latest World Economic Outlook report (April 2023), Indias growth is expected to slow down to 6.1% in 2023-24 from ~6.8% in 2022-23 (estimated) due to tightening financial conditions and global headwinds. Still, Indias growth outlook remains solid on strong domestic fundamentals such as a relatively low level of inflation compared to the DMs, a prudent monetary and fiscal policy mix and as a consequence of several reforms carried out in recent years, in addition to political stability. Indeed, India will continue to be the fastest growing major economy for the third consecutive year.
Indias growth outperformance is expected to lead to strong domestic demand, partially offsetting the impact of global headwinds. Consumption growth will remain healthy, supported by a sustained recovery in consumer services (retail sales, hotels and restaurants, transport and communications); an improvement in labour market conditions, particularly in the formal sector; increasing consumer confidence; an expected recovery in rural demand; and higher purchasing power with moderating inflation.
The investment cycle is expected to strengthen further, supported by higher private capex and the Governments continued focus on capital spending. A pickup in private capex will be led by healthier balance sheets of companies and banks along with improving capacity utilization in manufacturing. While slowing global growth will drag exports, Indias rising share in global manufacturing exports will provide some cushion as will the growth in services exports. Key risks to Indias growth outlook include a significant tightening in financial conditions to contain high inflation, a sharp rise in commodity prices and protracted recessionary tendencies in DMs.
INTERNATIONAL GROWTH MARKETS OF VOLTAS
MENA
As per IMFs latest World Economic Outlook report (April 2023), the Middle East and North Africa (MENA) region is anticipated to grow by 3.1% in 2023. The global environment presents great opportunities for Gulf Cooperation Council (GCC) countries and developing oil exporters, as oil and gas prices continue to be significant sources of export earnings and fiscal revenues.
UAE
UAEs GDP is forecasted to grow by 3.5% in 2023 as against 7.4% in 2022. Being a major beneficiary of the higher oil prices, UAE is expected to be favourably positioned to counter the economic challenges posed due to the geo-political tensions. With sanctions being imposed on Russia, countries are turning to the Middle East as a partner of choice to meet their energy demands. UAE is also reaping the rewards of its timely response to the COVID-19 pandemic and is focusing on improving its non-oil GDP.
QATAR
Qatars GDP is expected to grow at slower pace of 2.4% in 2023 as against 4.2% in 2022. The countrys growth is anticipated to be driven by fixed capital formation due to investment activity, especially in the countrys Liquified Natural Gas (LNG) infrastructure. Having received the opportunity to host the prestigious FIFA World Cup, Qatar is also expected to benefit from increased tourism activity..
SAUDI ARABIA
Saudi Arabia is the worlds 18 largest economy, and grew by 8.7% in 2022. However, its growth is expected to be slow (3.1%) in 2023 because of the decision taken by the Organization of Petroleum Exporting Countries (OPEC) and its allies to reduce oil output. Nevertheless, structural reforms to improve the business environment are expected to catalyse private investment and ensure robust non-oil growth.
Source: IMF World Economic Outlook report (April 2023)
BUSINESS OVERVIEW
As an integral member of the Tata Group, Voltas has established itself as a leader in India in cooling products, and prides itself on being the countrys No.1 Room Air Conditioner brand. Moreover, the Company has a diversified footprint in other business domains, including Engineering Products and Electromechanical Projects and Services. The Company has maintained its market leadership over the years by consistently delivering high-quality products to its customers. Voltas maintains its market positioning in India and in the MENA region.
Voltbek Home Appliances Private Limited (Voltbek) is a joint venture with an equal partnership between Voltas and Ar?elik –one of Europes largest household appliance manufacturers. This partnership has enabled Voltas to leverage Ar?eliks robust R&D capabilities and combine them with Voltas strong distribution network. As a result, Voltas Beko has become one of the fastest-growing brands in India. Voltas Beko brand has sold over 3.3 million units of Home Appliances, including Refrigerators, Washing Machines, Microwaves and Dishwashers, thus becoming one of the first few new brands to reach this landmark in a short tenure.
Voltas has also established a strong foundation in efficient engineering and is responsible for creating sustainable solutions for turnkey projects both, in Indian and overseas markets and benefits from providing engineering solutions to a diverse range of industries – Rural Electrification, Textile Machinery, Mining and Construction Equipment, Water Management and Treatment and several more.
In the face of a turbulent global scenario, Voltas has exhibited its resilience. The Companys leadership in the Unitary Cooling Products business, and strong execution track record in the Projects business have enabled it to navigate through macroeconomic challenges such as rising input costs and tightened consumer spending.
Room Air Conditioners (RAC)
During the year, Voltas observed strong market demand for ACs with higher star ratings and also successfully increased the sales volume of air -conditioners in the inverter category. This was made possible with the support of the Companys expanded portfolio of SKUs with better features and strategic pricing. Voltas success in the Inverter Split AC category also prompted the Company to recently launch the inverter Window category. With a year-to-date market share of 21.6%, Voltas continues to hold the undisputed top spot in the overall AC market. The Companys market leadership is expected to be further reinforced by the growth of its exclusive brand outlets and active engagement with various channels and channel partners across the countrys length and breadth.
Opportunities and Outlook
The Indian Room Air Conditioner Market is expected to reach USD 5 billion by 2027-28, with a CAGR of ~10%. Voltas, being the industry leader with a market share of 21.6% (2022-23) in this segment, is expected to be at the forefront of this growth. The Companys superior product range, distinct brand positioning, and extensive channel network will allow it to capitalize on several trends forecasted to shape the Industrys future.
We continue to remain very optimistic on the Room Air Conditioner (RAC) business which will reap the benefits of the growth drivers, including hotter summers, rising disposable incomes and aspiration for a better lifestyle. Easy access to consumer finance has provided a much-needed boost to this category and will continue to do so in the future.
Household consumption was resilient and rural demand is expected to pick up in the coming years on the back of stability in the overall macro-economic environment, including tapering of inflation and higher consumer confidence.
The Company is setting up a backward integrated manufacturing facility in South India in line with the Governments policy of promoting ‘Make in India. The Governments Production Linked Incentive (PLI) scheme, which the Company has availed of, has provided traction for the industry to establish manufacturing capacities across India.
Air Coolers
The Air Cooler segment is a key product line extension strengthening Voltas positioning in the cooling products industry. The expansion of SKUs across all product categories and the implementation of distribution and dealer schemes have facilitated increased market penetration for the Company. Thereby, creating a positive outlook for upcoming operations and revenue. A 7.2% market share in this aggressive and fragmented market has improved Voltas total profitability in the category.
As an alternative to air conditioners, air coolers are increasingly popular among the growing lower middle class, which allows Voltas to compete in a high-growth market segment. In a country where many areas have a limited power supply, an air cooler ensures that it remains an integral part of many households. The Companys investments in the air cooler business coupled with incentive schemes directed towards primary sales and expansion of channel footprints, have allowed this vertical to grow by 27% during the year under review.
Opportunities and Outlook
Indias Air Cooler market is expected to exhibit a CAGR of 7.4% during 2022-27 period on the back of rising disposable income in the country. Moreover, with increased encouragement given to organized channels, Voltas is expected to harness several opportunities to cater to the increasing demand for air coolers in the coming years. The benefits of air coolers are not limited to the higher air quality but also the energy efficiency it delivers to users. Dry weather conditions and growing pollution levels across various cities make air coolers an attractive customer proposition.
Commercial Refrigeration
The Commercial Refrigeration segment continued its growth journey during 2022-23 and introduced many new SKUs. With the doubling of our capacity at the Waghodia Plant at Vadodara, Gujarat, Voltas will be in a sweet spot to launch a number of consumer-focused products with enhanced features. Further, with the long-term goal of maintaining market leadership, the Company is expanding its product portfolio to include Medical Refrigeration equipment.
The growth for this segment arises from the growing demand for frozen foods as dietary preferences have evolved with rapid urbanization, fuelled by the consumption of impulse goods such as ice-creams, chocolates and beverages. After witnessing a strong recovery with the resumption of post-pandemic normalcy, the segment has demonstrated high growth of 26% in volume.
Opportunities and Outlook
Commercial Refrigeration market size for the categories, the Company operates, is projected to expand at ~9% CAGR till the financial year 2025. Voltas had the opportunity to leverage the strong network it has established over the years to foster the growth of commercial refrigeration products. The stringent regulations surrounding the pollution caused by refrigeration will provide a better scope for innovation. Fluorocarbon refrigerants adversely affect the ozone layer. However, environmentally sustainable practices worldwide have resulted in the development of increasingly efficient mechanisms, in the field of hydrocarbon refrigerant. Voltas has already introduced the hydrocarbon refrigerant (R290) in the largest volume category (Freezers/Convertibles/Glass Top/Chest Coolers) and is working towards the application of Next-Generation Refrigerants for all our product range.
Threats
The global geo-political tensions have caused significant impacts across various businesses, resulting in rising input costs and supply chain disruptions. In addition, the global policy measures such as interest rate hikes to control inflation resulted in weakened consumer sentiment. The Companys strong brand image and market leadership have allowed it to navigate turbulent times. Voltas constant focus towards customer centricity, extensive distribution network and strategic localization have allowed it to remain a market leader across the majority of categories in the cooling industry.
Commercial Air Conditioning (CAC)
Voltas is a prominent player in the commercial air conditioning segment and this business encompasses air conditioning needs for both, human comfort and industrial applications. Due to the Companys equitable distribution network, the synergy between RAC and CAC enables Voltas to have a comprehensive presence in all market segments. CAC business includes sales of various cooling systems, such as VRF systems, Chillers, Ducted units, Light Commercial units for comfort cooling, Vapor Absorption Machines, LTR systems for process cooling, in addition to Customer Care and Retrofit business. From small to big commercial settings, commercial air conditioning is utilized to chill, heat, and dehumidify the air. Commercial Air Conditioning units can be used in offices, shops, cafes, restaurants, schools, leisure centres, gyms and other commercial properties to maintain a comfortable temperature and air quality for customers or employees in summer and winter. Voltas is planning to leverage digitalization in approaching customers and making them aware of its products and services. Voltas also intends to leverage digital tools to deliver enhanced value to customers while increasing the efficiency of its products and services and reducing carbon emissions. In addition, to fortify its network, Voltas has rolled out a new and improved channel partner policy and implemented digital tools and carbon emission reduction measures.
Opportunities and Outlook
As the economy gradually recovers, the CAC segment is expected to play an increasingly essential role in driving both, the Companys top line and bottom line. The need for comfort and demand for cooling across industries is increasing with every passing day, coupled with significant awareness and focus on carbon reduction. Voltas is creating new benchmarks in improving efficiencies and safety features in the product and service offerings.
ELECTRO_ MECHANICALP ROJECTS AND SERVICES
International Operations Business Group (IOBG)
Voltas has a proven track record of executing large scale complex projects for over 4 decades in the overseas markets. The Company is one of the premier MEP contractors in the GCC countries, primarily focusing on UAE and other countries such as Oman, Qatar and Bahrain. We have won several awards in the Middle East on the strength of engineering prowess, safety practices and superior execution skills. Recently, the Company also ranked #1 in MEP Contractors List 2022.
Voltas specializes in MEP, electro-mechanical works comprizing HVAC, electrical systems for buildings, plumbing, firefighting, ELV and specialized systems, building security, district cooling plants, and utility plants, water treatment solutions, irrigation and landscaping and solar power systems. Voltas has set up a MEP prefabrication - Modular Solutions Factory at Jebel Ali, Dubai, serving the region through various contractors. The Company also has a strong foothold in the UAEs Facility Management / Operation & Maintenance work.
The Company exercised caution due to geopolitical uncertainties coupled with higher commodity prices, and has adopted a selective bidding approach.
Opportunities and Outlook
The GCC will witness continued economic growth driven by the Governments initiatives in the Kingdom of Saudi Arabia (Vision 2030), Qatar (National Vision 2030) and Dubai (Dubai Economic Agenda ‘D33). Investments are expected in many infrastructure projects such as roads, tunnels, water distribution, district cooling, sewage treatment and power distribution. The Company is well-positioned to leverage its strengths to exploit these upcoming opportunities and selectively become a part of all the major projects. Very recently, the Company bagged the prestigious MEP project at Qiddiya Water Theme Park in the Kingdom of Saudi Arabia.
The Company will continue to focus on MEP, district cooling plants with chilled water network, installation and maintenance of sewage treatment plants, including network management, water storage (pumped) distribution and automation.
Threats
Solvency issues related to the Main Contractors could lead to disruptions and delays in the project execution and exposure to credit risk. Moreover, arbitrary actions, violating the spirit of contractual terms and conditions, including encashment of bank guarantees issued by the Company to the Main Contractors could significantly impact the profitability and liquidity of the Company.
Unavailability of skilled labour in the host country, in compliance with localization or demographic profile requirements, may lead to reduced productivity and higher costs.
Disruptions in global supply chains and fluctuating commodity prices may pose a threat to the business profitability. Further, the impetus on local manufacturing and the in-country value approach may impact business.
VOLTBEK HOME APPLIANCES PRIVATE LIMITED (VOLTBEK)
The home appliances industry is among the fastest-growing sectors in the Indian market. This growth is driven by both large and small appliances. Further, the evolving nature of the community, changing lifestyles of Indian consumers, nuclear families, single-person households, advanced technology products and migration of the population have created large markets for this product segment.
Voltbek continues to combine the technical expertise of Ar?elik and the brand and distribution strength of Voltas, to expand its presence in Indian households. Further to gain market share in the low penetrated market, Voltbek is manufacturing ‘Made in India products in Sanand and focusing on expanding distribution in the organized trade network, especially in the South and West Indias market.
The strong focus of Voltbek in offering state-of-the-art innovative products ensures that it remains a popular choice in households and allows it to develop more energy-saving consumer durable goods, which will become an increasingly preferred option in the years to come. Voltbek has recently launched a fully automatic top load Washing Machine with heater which has had a good response.
The in-house manufacturing of products allows the business to produce customer-centric products with high quality and comfort. To scale up the business, certain initiatives have been taken up: installing full-scale manufacturing of the largest refrigerator category DC (Direct Cool), and the fastest-growing Frost-Free (230L - 270L) refrigerators at the Companys Sanand factory. Voltbek is attempting to create a USP by producing technically advanced products with a good value for money proposition. In addition, it aims to expand its reach and penetration by focusing on Organized Retail and increasing reach and extraction from distribution channels. Voltbek is also focusing on E-commerce channel platform and developing a wide range of ‘Made in India products with rich features across categories and capacities.
Opportunities
India is being viewed as an increasingly promising opportunity for the electrical goods market. This is backed by changes in the structure of the Indian population coupled with favourable Government policies, which has set up an exponential growth trajectory for industry players. Moreover, the increased affordability of home appliances due to rising disposable incomes and the range of financing options available to an Indian consumer has generated an increased demand for this segment.
Further, the focus on greater energy efficiency has brought the need for technological innovation, and the development of state-of-the-art innovative products, allowing to create a new range of products. The significant policy changes, especially those related to the regulatory and business environment, will further aid growth in this sector. The upcoming National Electronics Policy will have a core strategic objective of domestication in manufacturing, and this is likely to establish India as a production hub with other major manufacturing destinations like China. Foreign companies would be keen on establishing manufacturing units in India, leading to the emergence of an ecosystem of self-reliance and local manufacturing.
Threats
The monetary policy measures to control the soaring inflation rates have resulted in a tightened spending environment which can result in muted consumer sentiment. Thus, posing a threat to the sale of discretionary goods and services. The rise in input costs due to supply chain disruptions has influenced the margins of leading manufacturers. Another key fundamental driving the success of the electrical goods industry is the distribution of a stable power supply. Non-availability of a reliable source of power supply in several parts of the country, which is imperative for consumer electronics, could affect the demand projected for the electrical goods industry.
UNIVERSALM EP PROJECTS & ENGINEERINGSE RVICES LIMITED (UMPESL)
INFRASTRUCTURE SOLUTIONS
Voltas expertise gained over the years allows it to contribute to nation-building. The Infrastructure Solution business which was transferred during 2022-23 from Voltas to UMPESL, a 100% wholly owned subsidiary, caters to Mechanical, Electrical and Plumbing (MEP), Rural Electrification, Water Infrastructure Operations and Maintenance for medium-to-large projects in industries such as commercial buildings, data centres, manufacturing sites, modern infrastructure like Metros and Airports.
MEP
Voltas strategically shifted its focus from working with a general contractor to a direct client approach, thereby securing orders directly from end-users with better commercial conditions and sustainable gross margins. The orders spread all over India are progressing well, enabling timely project completion and better revenue recognition.
During the year, UMPESL secured a robust order book of ?1,178 crores, including significant projects such as Data Centre job (Noida), Godrej Commercial Building (Bangalore), Phoenix Equinox Commercial Complex (Hyderabad), Chennai Metro, Bangalore Metro, and a MMRDA Tunnel Project.
WATER
In the Water sector, UMPESL primarily serves Municipal/ Government clients with less than 5% of revenue coming from Private Sector Industrial clients. UMPESL offers three distinct services: Treatment Equipment Manufacturing, EPC Contract for Water Treatment and Distribution projects and Operations & Maintenance (O&M) Contracts.
Water projects are well-funded and to ensure profitability and healthy cash flow, UMPESL is selective in considering new proposals and maximizing O&M initiatives. UMPESL secured new orders of about ?815 crores, including around ?500 crores for water supply under the Jal Jeevan Mission (JJM) under the State Water & Sanitation Mission of the UP Government.
ELECTRICAL
UMPESL has developed highly effective transmission and distribution systems, enabling the Company to bring electricity even to the most remote areas. These systems have played a crucial role in the successful electrification of over 30,000 villages across the country, improving the lives of countless individuals and communities.
The Extra High Voltage Transmission Industry is transforming to achieve ‘One Nation – One Grid – One Frequency for better renewable energy synchronization. Therefore, the Transmission
& Distribution (T&D) sector is expected to see an investment of ?5.8 lakhs crores in the next 5 years. New orders worth ?1,769 crores are anticipated in 2023-24 which will create opportunities for us in UP, MP and West Bengal and includes multiple substation projects with air and gas insulation and other distribution projects.
UMPESL will continue picking up healthy orders and deliver a sustainable performance with minimal risks. Infrastructure Solutions business witnessed a jump in order book to ?5,799 crores in 2022-23 as compared to ?3,638 crores in 2021-22.
Opportunities and Outlook
Growth of the economy and the Governments focus on infrastructure development, are expected to improve business with ample opportunities in the segments of water, electrical, and modern infrastructure. Timely and cost-effective execution across sub-verticals of Infrastructure Solutions provides an edge over similar other players in the Industry.
The AatmaNirbhar Plan of the Indian Government with an objective of self-sustainability for most of the Industrial sectors augurs well for the infrastructure development in India. The key challenge however, continues to be the timely execution of projects within allocated costs along with smart and efficient working capital management.
Textile Machinery Division (TMD)
In recent times, fluctuations in cotton and yarn prices have caused instability in the textile industry. Due to low demand for yarn from foreign markets, the market remained sluggish, resulting in reduced utilization of spinners. The decrease in demand for clothing in Western markets impacted the apparel sector, with exporters operating only at 60% capacity. Despite these challenges, TMDs business performance achieved record-high levels, due to strong order booking and emphasis on ‘After-Sales business. The Companys increased efforts strengthen the income potential of each of its product lines with the spinning equipment market share rising to 64%.
The Company has a strong presence across 16 locations in India, which includes textile hubs such as Madurai, Ludhiana, Surat, Coimbatore and others. In 2022-23, the Company expanded its portfolio with the addition of post-spinning allied machinery and weaving preparatory equipment and explored opportunities by identifying new principals for non-woven, embroidery and other products. During the year under review, the TMD business was transferred by Voltas to UMPESL.
Outlook and Opportunities
Indias textile industry not only caters to the rising domestic demand but also has the potential to establish India as a hub for exporting textile products, representing the largest export opportunity. The Indian Textile and Apparel industry is valued at about USD 2.5 billion, which is currently growing at a rate of 5% annually. Indias textile and apparel industry is moving from labour-intensive production to a more developed and industrialized sector, which bodes well for Voltas.
The industry has strong support from the Government in the form of the Production-Linked Incentive (PLI), the Rebate of State and Central Levies and Taxes (RoSCTL) Scheme, the Remission of Duties and Taxes on Exported Products (RoDTEP), and the 7 Mega Integrated Textile Region and Apparel (PM MITRA) Parks, with a total investment of ?4,445 crores, all contributing to the textile industrys continued growth potential.
With an ambition to accelerate its growth, Voltas has ‘Six Strategic Priorities for 2023-24: grow revenue and market share of Spinning machinery, grow revenue in each line in PSD machinery, continue growth in ‘After Sales business, selectively add new partners, expand the horizons and build brand, which will enable to maintain its sustained growth.
Threats
The most significant concern surrounding the textile machinery industry is its cyclic nature and also the lack of break through innovation in the past few years. The global macro-economic environment has also resulted in reduced spending globally, which has been a barrier towards increasing the capital expenditure in the textiles sector.
TMD however, believes in adding value through robust technological solutions. The Company has worked closely with industry stalwarts to integrate technology in its business. It has ramped up its ‘After-Sales offerings to de-risk the business from the industrys capital cyclical nature.
Mining and Construction Equipment (M&CE)
During the year under review, the M&CE business was transferred from Voltas to UMPESL and UMPESL continues to operate as an engineering solutions provider, adding value to the global mining industry by maintaining earthmoving equipment at a competitive cost. Heavy mining equipment is the backbone behind the production process in the global opencast mining sector. UMPESL assures high availability and reliability of the equipment, leading to a considerable difference in the overall performance, allowing operators to reduce the overall output cost per ton.
Mozambique Business
The Company strengthened its position in Mozambique in 2022-23 by gaining confidence of the new mine owner, Vulcan (Jindal Group), which acquired these mines from Vale in the previous year. As a result, Vulcan was able to operate the mines more effectively and increased its coal output to 12 mtpa. UMPESL continues to develop newer business relationships in the region.
India Business
The Company has been a major player in Indias heavy and earthmoving machinery industry, and is widely acknowledged for launching many global brands in the Indian mining industry. M&CE supports equipment in India through their nationwide sales and service offices and warehouses network, together with Heavy Engineering Shop conveniently situated on job sites.
During the year, sales of power screen machines and parts were affected by the Governments imposition of 30% to 50% export duty fine on iron ore. The recent lifting of Governments ban shall bode well for reviving the equipment demand in the coming year. Meanwhile, the aggregate sector has rescued to sustain equipment sales in the otherwise muted market.
Opportunities and Outlook
The Construction Equipment industry in India has the biggest prospects for expansion and opportunities in terms of growth and investment. The major factors currently driving demand in India are the infrastructure projects by public and private enterprises like building construction, tunnels, maintenance, road construction, power plants, ports, and urban infrastructural developments, including smart cities. This will help the business immensely.
In addition, UMPESL intends to broaden the scope of its service agreements in Mozambique. In India, the focus will be to increase the customer reach through strategic service partnerships for various mining equipment running in coal mines.
Threats
Increase in export duty fines on iron ore has marginally impacted the demand for capital equipment and has an impact on the profitability of operations. The construction equipment manufacturers face the challenge of bringing new technology. Lack of special incentives or schemes to finance the import of hi-tech construction equipment for infrastructure projects limits innovation in the industry. However, a customer centric approach and pool of highly skilled engineers shall help the M&CE business to continue leadership in the Crushing & Screening equipment and securing contracts for the mining business in India and in Mozambique.
FINANCIAL PERFORMANCE: CONSOLIDATED
Financial performance as a measure of operational performance:
(A) GROSS SALES/INCOMEF ROM OPERATIONS (SEGMENT REVENUES)
? in crores
| 2022-23 | 2021-22 | Change | Change% | |
| Segment-A (Unitary Cooling Products) | 6,475 | 4,882 | 1,593 | 33 |
| Segment-B (Engineering Projects) | 2,402 | 2,470 | (68) | (3) |
| Segment-C (Engineering Products) | 522 | 489 | 33 | 7 |
| Total | 9,399 | 7,841 | 1,558 | 20 |
Despite early rains in April/May 2022, being the peak season period for Room Air Conditioners (RACs), the Unitary Cooling Products (UCP) business achieved an overall 33% growth in revenue in 2022-23 over last year.
(B) EMPLOYEEBE NEFITS EXPENSE
? in crores
| 2022-23 | 2021-22 | Change | Change% | |
| Employee benefits expense | 667 | 618 | 49 | 8 |
Employee benefits expense comprise salary, wages, and commission to the Directors and Companys contribution to Provident Fund and other funds, gratuity and staff welfare expenses. The Employee benefits expense was higher by 8% on account of increase in manpower, especially for Products business and the annual increments.
(C) FINANCE COSTS
? in crores
| 2022-23 | 2021-22 | Change | Change% | |
| Interest | 30 | 26 | 4 | 15 |
Finance costs is interest paid on bank credit facilities availed for the execution of overseas projects.
(D) PROFITABILITY
? in crores
| 2022-23 | 2021-22 | Change | Change% | |
| Profit before exceptional items and tax | 551 | 697 | (146) | (21) |
| Exceptional items | (244) | - | (244) | (100) |
| Profit before tax | 307 | 697 | (390) | (56) |
| Profit after tax | 136 | 506 | (370) | (73) |
Due to severe competition and aggressive pricing adopted by competitors, the margins in RAC business remained under pressure. Further, due to delays in certifications and release of payments in Projects businesses, the Company has in line with its prudent policy created provisions on the receivables, thereby impacting the profitability.
At the same time, due to the unilateral encashment of bank guarantees by the Main Contractors, including the termination of a contract as a sequel to the termination of the Main Contract by the Client, the Company has made a provision of ?244 crores in respect of receivables and bank guarantees encashed for two overseas contracts of the Project business and the same have been reflected under Exceptional items. The Company has initiated legal proceedings against the Main Contractors for recovery of the proceeds of bank guarantees encashed and other amounts due from these Main Contractors.
Financial Position : Consolidated
(A) BORROWINGS (Non-current and Current)
? in crores
| 2022-23 | 2021-22 | Change | Change% | |
| Borrowings | 616 | 343 | 273 | 80 |
| Lease liabilities | 35 | 18 | 17 | 94 |
| Total | 651 | 361 | 290 | 80 |
Borrowings represent working capital and term loan facilities availed for overseas Projects business.
(B) INVESTMENTS
? in crores
| 2022-23 | 2021-22 | Change | Change% | |
| Non-current investments | 2,801 | 3,181 | (380) | (12) |
| Current investments | 307 | 434 | (127) | (29) |
| Total | 3,108 | 3,615 | (507) | (14) |
Investments include debt mutual funds, investment in bonds, preference shares and strategic equity instruments in Tata group companies and in joint ventures and associates. Drop in value of investments is offset by investments in bank and other deposits classified under Other Financial Assets.
(C) IN VENTORIES
? in crores
| 2022-23 | 2021-22 | Change | Change% | |
| Raw materials, components, stores and spares | 771 | 567 | 204 | 36 |
| Work-in-progress (net) | 9 | 7 | 2 | 29 |
| Finished goods | 492 | 598 | (106) | (18) |
| Stock-in-trade of goods (for trading) | 320 | 489 | (169) | (35) |
| Total | 1,592 | 1,661 | (69) | (4) |
Movement in inventory reflects the mix of high level of raw materials to meet the seasonal demand and low level of inventory in finished goods and stock-in-trade, signifying higher sales volumes during 2022-23.
(D) TRADE RECEIVABLES
| ? in crores | ||||
| 2022-23 | 2021-22 | Change | Change% | |
| Trade receivables | 2,192 | 2,110 | 82 | 4 |
Trade Receivables have increased depicting the increased time in receipt of due receivables in the Projects businesses.
(E) OTH ER ASSETS
? in crores
| 2022-23 | 2021-22 | Change | Change% | |
| Other current financial assets | 353 | 80 | 273 | 341 |
| Other non-current financial assets | 272 | 83 | 189 | 228 |
| Contract assets | 978 | 748 | 230 | 31 |
| Other current assets | 316 | 271 | 45 | 17 |
| Other non-current assets | 86 | 104 | (18) | (17) |
Other financial assets (current and non-current) comprise security deposits, deposits with customers and fixed deposits. Other assets (current and non-current) primarily include balance with Government authorities and capital advances. Contract assets represent contract revenues recognized in Projects business, in excess of certified bills. In Projects business, revenues are recognized on the basis of the percentage of completion method, in line with the accounting standards.
(F) LIABILITIES AND PROVISIONS
? in crores
| 2022-23 | 2021-22 | Change | Change% | |
| Current liabilities | 4,620 | 4,056 | 564 | 14 |
| Non-current liabilities | 166 | 153 | 13 | 8 |
Current liabilities include contract liabilities, borrowings, trade payables, short-term provisions, income tax liabilities and other current liabilities. Non-current liabilities consist of long-term provisions, trade payables and deferred tax liabilities. Provisions (long-term and short-term) are towards employee benefits – gratuity, pension, medical benefits and compensated absences, trade guarantees and contingencies, among others.
FINANCIAL PERFORMANCE: STANDALONE
Financial performance as a measure of operational performance:
(A) GROSS SALES/INCOMEF ROM OPERATIONS (SEGMENT REVENUES)
? in crores
| 2022-23 | 2021-22 | Change | Change% | |
| Segment-A (Unitary Cooling Products) | 6,475 | 4,882 | 1,593 | 33 |
| Segment-B (Engineering Projects) | 913 | 1,619 | (706) | (44) |
| Segment-C (Engineering Products) | 182 | 489 | (307) | (63) |
| Total | 7,570 | 6,990 | 580 | 8 |
The Board of Directors of Voltas had earlier at its Meeting held on 12 February, 2021, approved the transfer of domestic B2B businesses relating to Projects business comprising Mechanical Electrical and Plumbing (MEP)/ Heating, Ventilation and Air-Conditioning (HVAC) and Water projects, Mining and Construction Equipment (M&CE) business and Textile Machinery Division (TMD) business to its wholly owned subsidiary, Universal MEP Projects & Engineering Services Limited (‘UMPESL) via slump sale through a Business Transfer Agreement (‘BTA), which was consummated on 1 August, 2022, being the ‘Closing Date. Accordingly, total revenue of the Company (stand-alone) includes revenue of transferred businesses for part of the year and therefore not comparable with last year.
(B) OTHERINCOM E
? in crores
| 2022-23 | 2021-22 | Change | Change% | |
| Other income | 175 | 168 | 7 | 4 |
Other income comprises rental income, dividend from investments, interest income and profit from sale of investments.
(C) EMPLOYEE BENEFITS EXPENSE
? in crores
| 2022-23 | 2021-22 | Change | Change% | |
| Employee benefits expense | 437 | 489 | (52) | (11) |
Employee benefits expense comprise salary, wages, and commission to the Directors and Companys contribution to Provident Fund and other funds, gratuity and staff welfare expenses.
(D) FINANCE COSTS
? in crores
| 2022-23 | 2021-22 | Change | Change% | |
| Interest | 12 | 15 | (3) | (20) |
Finance costs is interest paid on borrowings from banks for execution of overseas projects.
(E) DEPRECIATION AND AMORTIZATION EXPENSES
? in crores
| 2022-23 | 2021-22 | Change | Change% | |
| Depreciation and Amortization Expenses | 36 | 33 | 3 | 9 |
The charge for depreciation on fixed assets was higher for the year 2022-23 as compared to the previous year as it also included depreciation on Right to Use Asset as per Ind AS 116.
(F) OTHER EXPENSES
? in crores
| 2022-23 | 2021-22 | Change | Change% | |
| Other expenses | 699 | 596 | 103 | 17 |
Other expenses include repairs and maintenance, travel and communication costs, service maintenance charges, other selling expenses, external services/contract labour charges, subscriptions, e-auction charges, C&F charges, moving and shifting expenses, staff selection expenses, brand equity expenses and commission paid to Non-Executive Directors. Increase in Other expenses is on account of higher sales volume of Unitary Cooling Products business.
(G) PROFITABILITY
? in crores
| 2022-23 | 2021-22 | Change | Change% | |
| Profit before exceptional items and tax | 553 | 763 | (210) | (28) |
| Exceptional items (net) | 975 | - | 975 | 100 |
| Profit before tax | 1,528 | 763 | 765 | 100 |
Profit before exceptional items was lower on account of lower margins in RAC business and provisions made in Project businesses. Exceptional items (net) comprises gain on transfer of businesses to UMPESL; reversal of provision earlier made for diminution in value of investments in UMPESL and provisions on account of cancellation of contract and encashment of bank guarantee.
Financial Position: Standalone
(A) BORROWINGS (Non-current and Current)
? in crores
| 2022-23 | 2021-22 | Change | Change% | |
| Borrowings | 285 | 126 | 159 | 126 |
| Lease liabilities | 30 | 14 | 16 | 114 |
| Total | 315 | 140 | 175 | 125 |
Borrowings were primarily for execution of overseas projects which have increased due to higher bank credit facilities availed in UAE.
(B) INVESTMENTS
? in crores
| 2022-23 | 2021-22 | Change | Change% | |
| Non-current investments | 4,655 | 3,691 | 964 | 26 |
| Current investments | 307 | 434 | (127) | (29) |
Non-current investments comprise investment in subsidiaries, joint ventures, associates and investment in Mutual Funds, Bonds and Preference Shares. Current investment comprise investment in Mutual Funds and Bonds/Debentures. The increase in Non-current investments was primarily on account of additional capital infusion in UMPESL and Voltbek. The movement in Current and Non-Current investments is also on account of re-classification based on cash outflow forecast for next 12 months.
(C) IN VENTORIES
? in crores
| 2022-23 | 2021-22 | Change | Change% | |
| Raw materials, components, stores and spares | 762 | 562 | 200 | 36 |
| Work-in-progress (net) | 8 | 7 | 1 | 14 |
| Finished goods | 491 | 597 | (106) | (18) |
| Stock-in-trade of goods (for trading) | 286 | 489 | (203) | (42) |
| Total | 1,547 | 1,655 | (108) | (7) |
Inventories as at year end is a mix of high inventory of raw material built up for the peak season and low level of finished goods and stock-in-trade representing higher sales volume during the year 2022-23.
(D) TRADE RECEIVABLES
? in crores
| 2022-23 | 2021-22 | Change | Change% | |
| Trade Receivables | 1,289 | 1,520 | (231) | (15) |
Due to better focus on cash collections across businesses, trade receivables were lower by 15% in 2022-23 as compared to last year.
(E) CASH AND C ASH EQUIVALENTS
? in crores
| 2022-23 | 2021-22 | Change | Change% | |
| Cash and Cash Equivalents | 374 | 451 | (77) | (17) |
Cash and bank balance at the year-end stood at ?374 crores. Reduction in current liabilities is on account of lower trade payables due to shift in procurement – to domestic vendors as compared to overseas suppliers with whom the Company had longer credit period.
(F) OTHER ASSETS
? in crores
| 2022-23 | 2021-22 | Change | Change% | |
| Other current financial assets | 381 | 110 | 271 | 246 |
| Contract assets | 373 | 576 | (203) | (35) |
| Other non-current financial assets | 261 | 76 | 185 | 243 |
| Other current assets | 222 | 222 | - | - |
| Other non-current assets | 71 | 95 | (24) | (25) |
Other financial assets (current and non-current) mainly comprise security deposit and fixed deposit with maturity of more than 12 months and security deposits. Other assets (current and non-current) comprise balance with Government authorities, capital advances and advance to suppliers. Contract assets represents contract revenues recognized in excess of certified bills. Revenues in Projects business are recognized on the basis of percentage completion method, in line with the relevant accounting standards.
(G) LIABILITIES AND PROVISIONS
? in crores
| 2022-23 | 2021-22 | Change | Change% | |
| Current liabilities | 3,130 | 3,519 | (389) | (11) |
| Non-current liabilities | 139 | 129 | 10 | 8 |
Current liabilities comprise contract liabilities, short-term borrowings, trade payables, short-term provisions, income tax liabilities and other current liabilities. Non-current liabilities consist of long-term provisions and trade payables.
RISK ANDC ONCERNS
The Company has developed and implemented a robust Enterprise Risk Management (ERM) Framework, by engaging E&Y for benchmarking with leading international risk management standards such as ISO 31000 and Committee of Sponsoring Organization of the Treadway Commission (‘COSO). The Company has adopted a consistent Framework and standard process to ensure a co-ordinated and integrated approach for managing Risks and Opportunities across the organization. The ERM Framework intends to reinforce the commitment of Voltas to effectively identify and manage the existing and emerging risks and harness the underlying opportunities while safeguarding the business value to achieve its strategic objectives. Voltas intends to develop and maintain a robust risk governance mechanism to facilitate risk informed decision-making by leveraging a fully integrated ERM Framework.
Risk Monitoring and Reporting
Risks and defined response action plans are regularly assessed, updated and reported at appropriate levels within the organization to maintain an ongoing oversight.
In addition to establishing an effective ERM framework, Voltas has been evaluating opportunities for adopting technology tools to enhance risk management processes implementation.
Some of the key business risks are in relation to: Supply Chain, Commodity Prices, Human Resources, Cyber Security, MacroEconomic factors, Competition, Environmental, Social and Governance and Brand Reputation. The Company has put in place adequate measures to mitigate these risks.
Risk Governance
HUMAN RESOURCE
Voltas places a high priority on human resources and regards it as a fundamental aspect of the Company. The Company considers its employees one of its most valuable assets and places human resources management at the forefront to build a strong team while promoting diversity in the workforce. At Voltas, seven strategic pillars guide the effective functioning of business processes in line with human resources management. It includes organization design, capability building, employee engagement, total rewards, simplification and digitalization, employer branding, sustainability along with CSR and Safety.
Voltas believes in providing better opportunities to its workforce and has implemented strict policies to guide employee behaviour and promote challenges. Therefore, the Companys key focus is on mapping critical jobs with the right person under the right head. The internal movement of talent is decided and development plans are aligned to this critical mapping. Voltas hires fresh talent from across the country to create a robust frontline workforce through campus recruitments. It invests in capability-building, digitalization, and engaging workers. Further to serve the pool of talent planning and management processes, Voltas has both long-term and short-term strategies. The Company undertakes robust learning and development initiatives that include technical, functional, leadership development and culture-building programmes.
Moreover, through digital tools such as Disprz Learning Management System and Nirantar Privriddhi, the Company has effectively educated over 20,000 contract and staff workers through various programmes.
Employee care and well-being are a priority for Voltas. Under this, it takes various initiatives such as running a compulsory Annual Health Check-up for all employees. It has also tied up with a Diagnostics Centre leveraging pan-India reach to facilitate access to quality healthcare services. Voltas aims to create a safe and harassment-free environment. For this, Voltas runs workplace awareness programmes to address sensitive situations like female equality and complaints in each location. These programmes combine both in-person discussions and online learning modules like Women and Child Developments Manual on Sexual Harassment of Women at Workplaces, POSH Classroom Training, and an employee e-learning website. These programmes put together safeguards Voltas work culture.
NT I ERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Companys internal financial control framework is commensurate with the size and complexity of its business operations, and in line with the IFC framework prescribed under Section 134(5) of the Companies Act, 2013. The control framework has documented policies and procedures covering all financial and operating functions. The controls are designed in line with the Companies Act 2013, and the Guidance Note on ‘Audit of Internal Financial Controls over Financial Reporting issued by The Institute of Chartered Accountants of India (ICAI). The Companys internal control systems are periodically tested by the Voltas Management, Statutory and Internal Auditors.
The Company has an independent internal audit function headed by the Chief Internal Auditor supported by co-sourced audit teams from leading Chartered Accountant firms. The Chief Internal Auditor reports to the Board Audit Committee and the Internal Audit department is staffed by qualified and experienced personnel.
Internal audit (IA) carries out a focused and risk-based annual internal audit plan approved by the Board Audit Committee. The scope and coverage of audits include review and reporting on key process risks, adherence to operating guidelines and statutory compliances. IA also provides recommendations for control improvements and enhancement in the efficiency of operations.
The Audit Committee regularly reviews significant audit findings, adequacy and reliability of financial reporting and internal control and risk management frameworks. During the year, the operating effectiveness of internal controls was tested as part of the Managements control testing program. Based on the assessment and evaluation of the results thereof, the Board, with the concurrence of the Audit Committee, was of the opinion that the Companys Internal Financial Controls were adequate and operating effectively as of 31 March, 2023.
CAUTIONARYST ATEMENT
The statement, forming a part of this Report, may contain certain ‘forward-looking remarks with the meaning of applicable Securities Law and Regulations. Many factors could cause the actual results, performances, or achievements of the Company to be materially different from any future results, performances, or achievements. Significant factors that could make a difference to the Companys operations include domestic and international economic conditions, changes in Government regulations, tax regime and other statutes.
REPORT OF THE BOARD OF DIRECTORS
To the Members
Your Directors present their 69th Annual Report and the Audited Statement of Accounts for the year ended 31 March, 2023.
1. Financial Results
? in crores
| Consolidated | Standalone | |||
| 2022-23 | 2021-22 | 2022-23 | 2021-22 | |
| Total Income | 9,667 | 8,124 | 7,850 | 7,266 |
| Profit for the year after meeting all expenses but before exceptional items, interest and depreciation | 742 | 870 | 601 | 811 |
| Interest | 30 | 26 | 12 | 15 |
| Depreciation and amortisation | 40 | 37 | 36 | 33 |
| Profit before exceptional items, share of profit/(loss) of joint ventures and associates and tax | 672 | 807 | 553 | 763 |
| Exceptional items | (244) | - | 975 | - |
| Share of profit/(loss) of joint ventures and associates | (121) | (110) | - | - |
| Profit before tax | 307 | 697 | 1,528 | 763 |
| Tax expenses | 171 | 191 | 123 | 180 |
| Profit after tax | 136 | 506 | 1,405 | 583 |
| Other comprehensive income (net) | (38) | 170 | (57) | 166 |
| Total comprehensive income | 98 | 676 | 1,348 | 749 |
2. Operations
In 2022, the domestic economy experienced an overall revival without any Covid restriction. However, due to the geo-political tension between Ukraine and Russia, countries across the globe continued to remain impacted. Supply chain disruptions and strengthening of the Dollar Index resulted in depreciation of local currencies. Increases in Oil and other energy costs have fuelled inflation in developed and developing economies forcing Central Banks across the globe to withdraw accommodative policies by increasing their benchmark rate. The high cost of borrowing will impact future growth across economies.
Given the above challenges, the International Monetary Fund (IMF) has lowered its outlook for the global economy to 2.8%. Nevertheless, India continues to be the fastest growing economy in the world. The Central Bank in India has also taken cognizance of high inflation and has announced increases in its benchmark rate aggregating 250 bps during the year before pausing in the last Monetary Policy meeting in April 2023.
Amidst a demanding environment and various headwinds, the Company has sustained its topline for the year under review largely due to the availability of an un-interrupted season for its Unitary Cooling Products business and the timely execution of project orders.
The Companys focus on the Inverter sub-category with competitive pricing and a larger number of SKUs yielded positive results. Inverter ACs now account for over 75% of total Split ACs sold, as compared to 63% in the previous year.
The Commercial Refrigeration Products business has registered an excellent growth due to the increased participation of OEMs engaged in the ice-creams, chocolates and beverages Industries and expansion of modern retail stores across the country. With the objective of product portfolio expansion, your Company has entered into a Technology License Agreement with Vestfrost Solutions, Denmark for medical refrigeration products which have a good potential to grow in the future.
In Air Coolers, introduction of SKUs across all product sub-categories and targeted secondary scheme with channel partners resulted in profitable growth for the category alongwith increase in market share over the previous year. Investments in product differentiation which secure long term benefits of value engineering has started delivering the desired result, which will further strengthen the brand recognition in future.
T he Company is expanding its production for both, Air-conditioner (to produce 2 million room ACs) and Commercial Referigeration products to cater to the increased demand and balance the supply chain. The capex outflow for the above is expected to be in the range of ? 450-500 crores, to be incurred over the next 18-24 months. The capex will be largely funded through internal accruals. However, other funding options may also be evaluated.
R esumption of commercial activities at an pace, expansion of retail outlets and focus on retrofit jobs along with high customer retentions enabled the Commercial Air Conditioning (CAC) business achieve growth in turnover and profitability as compared to last year.
A lo wer carry forward order book position and order inflow during the first half of the year under review kept the growth under pressure for the Projects business. However, the order inflow has significantly improved in the latter part of the year. The delay in closure of few critical projects, cost escalations and provisions made due to the unilateral action of the Main Contractors by encashing bank guarantees issued by the Company for 2 overseas projects, including termination of a sub-contract in the UAE, have significantly impacted the performance and profitability of the international business operations. The Company has made a provision of ? 244 crores towards the encahsed bank guarantees amount and other moneys receivable from the Main Contractors and has initiated legal proceedings against the Main Contractors. The said provisions have been reflected as exceptional items in the financial statements.
T he Engineering Products and Services Mining & Construction Equipment and Textile Machinery have performed better given the revival in the capital cycle, focus by the Government on the Infrastructure development along with sector specific production linked incentive scheme announced.
V oltbek, the joint venture company for white goods has, despite being a relative new entrant, achieved a cumulative sales volume in excess of 3.3 million units which is a good milestone, demonstrating the trust in the Voltas-Beko brand and acceptance of the products across the value chain. The efforts of substituting imports by inhouse manufacturing of high value added products, the launch of innovative and customer centric products and the focus on channel expansion by leveraging the strength of the joint venture partners has enabled Voltbek to accelerate its overall performance.
Y our Company has achieved a higher turnover compared to the previous year and the consolidated total income from operations was ? 9,667 crores. The consolidated Profit before share of profit/loss from joint ventures and associates and exceptional items was ? 672 crores and consolidated Net Profit after tax was significantly lower at ? 136 crores. Voltas ended the year with an Earnings per Share of ? 4.08 (Face Value per share of ? 1).
The Companys balance sheet continues to remain strong and healthy. The borrowings are primarily for the overseas muted operations. The tight control on the working capital with focus on collections in Projects business has improved the overall cash flow and the investments.
3. Reserves
An amount of ? 20 crores was transferred to the General Reserve out of the Profit available for appropriation.
4. Dividend Distribution Policy
I n accordance with Regulation 43A of the SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015 (‘Listing Regulations), the Board of Directors of the Company has adopted a Dividend Distribution Policy (‘Policy) based on the need to balance the twin objectives of appropriately rewarding the Companys shareholders with dividend, and of conserving resources to meet its future requirements. The Policy is attached to this Report as Annexure I, and the same is also available on the Companys website at https://www.voltas.com/images/_ansel_image_collector/DIVIDEND_DISTRIBUTION_ POLICY_1.pdf.
5. Dividend
Based on the Companys performance and keeping in mind the shareholders interest, the Directors recommend a dividend of ? 4.25 per equity share of ? 1 each (425%) for the year 2022-23 (2021-22: 550%). The dividend would result in a cash outflow of around ? 141 crores, reflecting pay out of 10% of the Net Profit and a pay out of 32.69% after excluding the exceptional items (net).
The dividend on equity shares is subject to the Shareholders approval at the 69th Annual General Meeting (‘AGM) scheduled to be held on 22 June, 2023. The Register of Members and Share Transfer Books of the Company will remain closed from 10 June, 2023 to 22 June, 2023 (both days inclusive) for the purpose of payment of the dividend for the year ended 31 March, 2023, and the AGM.
6. Finance
Cash management has been a focus for the Company. During the year, the Company invested further capital of ? 122.50 crores into Voltbek to support its accelerated growth plan. The cash and bank balance, including investments, continue to remain robust to support various initiatives including the capex plans for the expansion of production capacities and organic/inorganic growth avenues.
The minimal borrowing in the Companys balance sheet represents fund-based borrowings for overseas operations leveraging interest and cross currency, with domestic borrowing being largely confined to non-fund-based facilities. The credit rating has been reconfirmed to AA+ for the long-term and A1+ for short-term borrowings of the Company by the Rating Agency, enabling the Company avail banking facilities at competitive rates.
Digital transformation by adoption of digital technology in various processes has made the Company more effective and efficient. Cost optimisation across all functions, along with tight control on working capital, has resulted in generating a cash surplus during the year.
The year under review has seen a gradual withdrawal of accommodative stance extended during pandemic period by the Central Bank by increasing benchmark rate by 250 bps to contain the inflation. The action of the Central Bank has resulted in hardening of yields across maturities, with short term instruments impacted the most. The Companys investment policy considers three important principals of investing viz safety, security and liquidity and the investments are prudently monitored by the Investment Committee. As on 31 March, 2023, the Companys liquid investments (Mutual Funds, Bonds, ICDs and Bank Fixed Deposits) was over ? 2,000 crores.
Strengthening of the Dollar Index, widening of current account deficit and slower economy growth has resulted in the depreciation of the Rupee by close to 10% during the year under review. The Company has a well defind Forex policy, based on which its currency exposure is closely monitored to hedge the forward risk in a more structured and timely manner.
7. Business Restructuring
Domestic Businesses
As earlier reported, in order to have better emphasis on sustainable and profitable growth with increased focus on B2C and B2B verticals, the Board had in the year 2021-22, approved the proposal for transfer of the domestic business relating to MEP, HVAC and Water projects, Mining and Construction Equipment (M&CE) business and Textile Machinery Division to its 100% wholly-owned subsidiary, Universal MEP Projects & Engineering Services Limited (UMPESL) by slump sale and a Business Transfer Agreement (BTA) was executed on
24 March, 2021 between the Company and UMPESL. The said transfer was subject to certain ‘Conditions Precedent which have been completed and the transaction has been consummated on 1 August, 2022, being the ‘Closing Date. After taking into consideration the working capital adjustments, the consideration for transfer of aforesaid B2B businesses was ? 1,190 crores which has been received by the Company from UMPESL.
Overseas Operations
The Company has from time to time made investments in overseas subsidiaries and joint venture companies either directly or through its wholly owned subsidiary – Voltas Netherlands B.V. (VNBV), located in the Netherlands. In order to simplify the entire structure for better control and keeping in mind the future potential for business opportunities in the Middle East and Asia and in order to have ease for the overseas business operations and considering close proximity and better connect, VNBV has, during the year under review, transferred its entire ownership in the shareholding of the following joint ventures/ subsidiaries : Universal Voltas LLC – 49%; Saudi Ensas Company for Engineering Services WLL (Saudi Ensas) – 8%; Voltas Oman SPC – 100% and Lalbuksh Voltas Engineering Services Trading LLC (Lalvol) – 40%, to its wholly owned subsidiary, Universal MEP Projects Pte Limited (UMPPL), established in the Republic of Singapore, by way of its capital contribution. The legal process for change in the ownership has been completed and the Commercial Registration Certificates of the aforesaid companies have been suitably amended to reflect the name of UMPPL as a shareholder in place of VNBV. VNBV has also approved transfer of its 49% shareholding in Voltas Qatar WLL and the legal process for change in the Commercial Registration Certificate of Voltas Qatar WLL is in progress.
The Board has, at its Meeting held on 26 April, 2023, also approved the proposal for transfer of overseas branch offices of the Company in Dubai, Abu Dhabi, Sharjah in United Arab Emirates (UAE), Doha in Qatar, Bahrain and Singapore to UMPPL, the wholly owned subsidiary of Voltas Netherlands B.V. (VNBV), and a step-down subsidiary of Voltas. The transfer of business operations of Voltas overseas branch offices would be on a slump sale basis through execution of Business Transfer Agreement (BTA) for each branch separately, subject to satisfactory completion of ‘Conditions Precedent, as on the ‘Closing Date, including novation of existing contracts of Voltas in favour of UMPPL by the Main Contractors/Clients and such other compliances/procedures necessary or as may be applicable in the respective local jurisdictions.
The Board has also approved transfer of Voltas direct investments in overseas subsidiary companies – Weathermake FZE (100%) in Jebel Ali Free Zone, UAE; Saudi Ensas in Kingdom of Saudi Arabia (92%) and Lalvol in Sultanate of Oman (20%) to UMPPL through execution of Share Purchase Agreement
(SPA) for each company respectively, subject to requisite approvals as may be required.
The ‘Closing Date for transfer of overseas branch operations and investments in overseas subsidiaries is targeted to be completed by end December 2023 or such other date as may be mutually agreed between Voltas and UMPPL. With the aforesaid internal re-structuring, international operations of the Company, including the Companys investments in overseas joint ventures/subsidiaries would be housed in a separate wholly owned subsidiary – UMPPL. The consideration for transfer of Voltas overseas branch offices and investments in overseas subsidiaries would be at arms length based on an independent valuation, subject to necessary adjustments, if required in accordance with the provisions of BTA and SPA, respectively at the time of Closing.
This internal restructuring would enable the Company focus on the Products businesses and Projects businesses, independent of each other and to expand their respective growths. It woud also provide flexibility to Voltas to expand its Product businesses further in the B2C space.
8. Tata Business Excellence Model (TBEM)
Voltas has launched a digital centralised repository – ‘Nirantar Privriddhi for facilitating knowledge management and sharing of best practices by the Business Excellence and Quality Assurance (QA) team. This portal makes all the quality standards and QA reports available centrally. As part of capturing the voice of customers, CAST survey is initiated for all the consumer businesses.
Voltas also actively participated in TATA Innovista and contributed 5 entries which are currently under evaluation at the group level.
The Company will continue its efforts towards achieving business excellence.
9. IT Initiatives
During the year under review, the Companys IT team ensured the smooth transitions of all systems and applications in line with the Companys new organisation structure. Further, to enhance speed, scalability and system readiness, the IT team resorted to a cloud-first approach for all new developments and implementations. Modernisation of existing applications to make them cloud-ready are in process for the current and future business needs. The Company has migrated Voltas In-Shop Demonstration Applications (VISA) to Amazon Web Services (AWS) for ensuring better performance as part of Cloud first strategy. There was an increased focus on Cyber Security with upgrades and refreshes across applications for improving security and productivity. IT team also used various analytical tools including Power BI (Business Intelligence tool from Microsoft) for CXOs, MIS reporting, customer insight, service insight, and process insights, including consolidating digital assets and is moving towards Data Lake and Customer Data Platforms (CDP) to enhance the overall customer experience. IT solutions have been implemented as part of Industry 4.0 initiatives. PLM (Product Life- cycle Management) solutions, new line management solutions and IoT-enabled equipment for preventive and predictive maintenance are some of the key initatives for Industry 4.0. All these efforts are directed towards creating a future ready, digitally advanced and data driven organisation.
10. Safety Health Environment (SHE)
Voltas commenced its safety cultural transformation journey in 2019 and is currently in the ‘Independent phase on the Bradley Curve. To ensure consistency across all business units, the Company implemented several measures such as:
• Standardization of SHE management across all the businesses, including review and revision of policy, manuals, risk assessment and procedures.
• Establishment of SHE strategy and SHE goal settings, including training index, number of observations and number of leadership audits.
• Implementation of business-centric SHE leadership programmes, including mandatory training of senior leaders and their engagement in leadership audits. A total of 343 leadership audits were conducted by 137 senior leaders.
• Conducted dedicated campaigns on road safety with the participation of over 1,500 employees as well as 5S campaigns across all our work locations.
Implemented 5S (Seiri, Seiton, Seiso, Seiketsu, and Shitsuke) in manufacturing units and 2S (Seiri & Seiton) in all project sites.
• Certification, Re-certification and Surveillance of businesses for ISO 9001, ISO 14001 and ISO 45001.
• Creation of 40 model sites across the organisation.
• Digitization of SHE management processes, including QR code-based hazard/observation reporting, contractor safety management platform, vendor management platform, visitor management system and technician tracking app. 758 contractors were registered on Vendor and CSM platform, and around 10,000 technicians were tracked through technician tracking app.
• E-Learning modules including launch of new App Disprz were introduced to increase SHE awareness among employees.
• Conducted SHE Conclaves for business partners in Kolkata, Chennai, Bhubaneswar, Delhi and Mumbai to strengthen their competencies. A total of 16,000 person-hours of training and awareness was created among 400 contractors and around 600 employees from various businesses.
• Annual Safety Culture Survey was extended to workers, technicians and contractors and there was good response.
• Conducted Industrial Hygiene & Occupational Health Surveys at Manufacturing plants.
11. Sustainability Development
Based on the Tata Ethos of ‘Giving back to the Community, Voltas has designed its CSR framework in three verticals (a) Sustainable Livelihood which emphasizes on skilling and employability building for marginalized youth and women (b) Community Development which focuses on issues like quality education, health and water (c) Issues of National Importance which addresses national level issues like disaster response/ mitigation and sanitation.
Affirmative Action is a common thread for all the CSR initiatives of Voltas, and the projects undertaken actively work towards inclusion of SC and ST communities, Women and People with Disabilities (PWD).
Sustainable Livelihood
Skill Development and Employability Enhancement of marginalised youth has been the flagship programme of Voltas. The Company offers courses in Air Conditioning, Plumbing, Electrical, BSFI, Retail, IT enabled services, Tally and Accounting, Nursing assistant and Tailoring, which are industry oriented and relevant to market requirements. These courses have well-designed content, provide hands-on-training in well-equipped laboratories, on-job-training in real-life situations, soft skills and safety.
Through 27 Skill Development Centres across 13 States in India, Voltas is creating a shared value which converges the aspirations of the community and the requirements of the Industry to create a larger pool of skilled technicians. Voltas has up to 31 March, 2023 skilled around 39,700 students in various trades and has set a target of skilling up to 45,000 students by 2024-25.
During 2022-23, the Company had appointed KPMG to carry out an impact assessment study of the aforesaid programmes on the lives of the beneficiaries and an executive summary of their findings forms part of the Annual Report on CSR Activities annexed to this Report.
Voltas has received the coveted Appreciation Plaque for its commendable work in the Skill Development and Livelihood category of the FICCI CSR awards in a special event organised at New Delhi on 12 December, 2022.
Community Development
This vertical focusses on Education, Health and Water based on the priority needs of the local communities. The key communities addressed through this vertical are women, children, differently abled persons, farmers, schools and other institutions.
Issues of National Importance
Voltas supports the social issues of national importance, including disaster management. Two major projects pursued under this vertical are:
(i) Integrated Sanitation Project, Waghodia (Gujarat):
The Company initiated this project in 10 villages of the Waghodia District in Gujarat through Coastline Salinity Prevention Cell (CSPC), an independent agency, for enhancing overall sanitation in the villages through Water, Sanitation and Hygiene (WASH) interventions.
(ii) Participatory Ground Water Management and Sustainable Agriculture Project, Beed (Maharashtra):
The Company initiated this project in 6 villages of Beed District of Maharashtra through Action for Food Production (AFPRO), an independent agency, for creation and efficient management of water resources and promoting sustainable farming practices to address or mitigate perennial drought situation in the area.
During 2022-23, the Company had appointed Price Waterhouse Chartered Accountants LLP (PW) to carry out an impact assessment study of the aforesaid projects on the lives of the beneficiaries and an executive summary of their findings forms part of the Annual Report on CSR Activities annexed to this Report.
12. Corporate Social Responsibility (CSR)
Disclosure as per Rule 8 of Companies (Corporate Social Responsibility Policy) Rules, 2014, in prescribed form (as amended) is enclosed as Annexure II to the Directors Report.
During 2022-23, the Company spent ? 14.60 crores towards various CSR activities, in line with the requirements of Section 135 of the Companies Act, 2013 (‘Act). Details of the composition of the CSR Committee and Meeting held during 2022-23 are disclosed in the Corporate Governance Report.
13. Consolidated Financial Statements
The Consolidated Financial Statements of the Company and its subsidiaries for the year 2022-23 are prepared in compliance with the applicable provisions of the Act and as stipulated under Regulation 33 of the Listing Regulations, as well as in accordance with the Indian Accounting Standards notified under the Companies (Indian Accounting Standards) Rules, 2015. The Audited Consolidated Financial Statements, together with the Auditors Report thereon, forms part of this Annual Report.
14. Subsidiary/Joint Ventures/Associate Companies
As on 31 March, 2023, the Company had 9 subsidiaries (direct and indirect), 4 joint ventures and 1 associate company.
As per the requirements of Section 129(3) of the Act, a statement containing salient features of the financial statements of subsidiaries, joint ventures and associate companies in prescribed Form No. AOC-1 is attached to the financial statements of the Company. Further, pursuant to Section 136 of the Act, the standalone financial statements of the Company, consolidated financial statements along with relevant documents and separate audited accounts in respect of subsidiaries are available on the Companys website – www.voltas.com.
The Policy for determining material subsidiaries of the Company is also provided on the Companys website at https://www.voltas.com/images/_ansel_image_collector/DETERMINING_MATERIAL_SUBSIDIARY_ POLICY_1.pdf
As of 31 March, 2023, the Company did not have any material subsidiary.
Performance of key operating subsidiary and joint venture companies in India are given below:
Consequent upon consummation of BTA, with effect from 1st August, 2022, Revenue from Operations of Universal MEP Projects & Engineering Services Limited (UMPESL), a wholly owned subsidiary of the Company also include revenue of businesses transferred by Voltas. Further in line with the requirements of the Accounting Standard, the previous year numbers have also been restated. Accordingly, UMPESL has reported turnover of
? 1,767 crores and profit before tax of ? 235 crores in 2022-23, as compared to ? 1,589 crores and ? 184 crores, respectively in the previous year.
Voltbek Home Appliances Private Limited (Voltbek), the joint venture with Ar?elik A. . for Consumer White Goods has reported a turnover in excess of ? 1,000 crores for 2022-23. However, due to increase in costs on account of inflationary pressures, which were not fully passed onto the market, Voltbek has reported a higher loss in the current financial year as compared to the previous year. The long term prospects remain buoyant and Voltbek has achieved a cumulative sales volume of over 3.3 million units (upto 2022-23). This is a significant milestone achieved in a short duration of time by Voltbek, despite being a new entrant in the market. There has been steady growth in market share for Refrigerators and Washing Machines during 2022-23 over last year and several initiatives and action plans have been put in place for achieving breakeven. Voltas as one of the main shareholders (49%) has provided full support in terms of its Distribution Reach, Channel Partners network and financial support in the form of capital infusion. Similarly, Arcelik is extending support in terms of product technology and making similar capital infusion. The paid-up capital of Voltbek as on 31 March, 2023 was ? 1,277 crores. During 2022-23, the Company has invested ? 122.50 crores in share capital of Voltbek and the Companys total investment in Voltbek was ? 625.73 crores.
Except as mentioned above, there have been no material changes in the nature of the business of the subsidiaries, including associates and joint ventures during the financial year 2022-23.
The name of Voltas Water Solutions Private Limited (VWS), an associate of the Company, has been struck-off from the Register of Companies with effect from 26 July, 2022 based on an application made to the Registrar of Companies, Maharashtra, Mumbai. Accordingly, VWS ceased to be an associate of the Company during the year 2022-23.
15. Number of Board Meetings
During 2022-23, seven Board Meetings were held on 12 April, 2022; 5 May, 2022; 2 August, 2022; 1 November, 2022; 6 December, 2022; 9 February, 2023 and 10 March, 2023. All the Board Meetings were held physically and facility of participation at Board Meetings through video conferencing was provided to those Directors who had requested for the same.
16. Policyon Directors Appointment and Remuneration, including Criteria for Determining Qualifications, Positive Attributes, Independence of a Director
Based on the recommendation of the Nomination and Remuneration Committee (NRC), the Board has adopted the Remuneration Policy for Directors, KMPs and other employees. NRC has formulated the criteria for determining qualifications, positive attributes and independence of an Independent Director, alongside the criteria for Performance Evaluation of individual Directors, the Board as a whole and the Committees. The Companys Policy on Directors appointment and remuneration, and other matters provided in Section 178(3) of the Act is disclosed in the Corporate Governance Report, which is a part of the Annual Report and is also available on https://www.voltas. com/images/_ansel_image_collector/DISCLOSURE_OF_REMUNERATION_POLICY_FOR_DIRECTORS.pdf
17. E valuation of Performance of Board, its Committees and Directors
Pursuant to the provisions of the Act and Regulation of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), the Board carried out an evaluation of its performance, Committees and individual Directors. The performance of the Board as a whole, Committees and individual Directors was evaluated by seeking inputs from all Directors based on certain parameters as per the Guidance Note on Board Evaluation issued by SEBI such as: Board structure and composition; Meetings of the Board in terms of frequency, agenda, discussions and dissent, if any, recording of Minutes and dissemination of information; Functions of the Board, including governance and compliance, evaluation of risks, stakeholder value and responsibility, Board and Management, including evaluation of the performance of the Management. The Directors also made their self-assessment on certain parameters – attendance, contribution at meetings and guidance/support extended to the Management. The feedback received from the Directors was discussed and reviewed by the Independent Directors at their separate Annual Meeting held on 21 March, 2023, and also shared with the NRC/ Board. At the separate Annual Meeting of Independent Directors, the performance of Non-Independent Directors, including the Chairman, Board as a whole and various Committees was discussed. The Independent Directors in the said meeting also evaluated the quality, quantity and timeliness of the flow of information between the Management and the Board, that is necessary for the Board to effectively and reasonably perform their duties. They expressed their satisfaction in respect thereof. The performance of the individual Directors, performance and role of the Board/ Committees was also discussed at the Board Meeting held on 26 April, 2023. The performance evaluation of Independent Directors was done by the entire Board, excluding the Independent Director being evaluated.
18. Statutory Auditors
A t the 68th Annual General Meeting (AGM) held on
24 June, 2022, the Members of the Company approved the reappointment of S R B C & Co. LLP (SRBC) as Statutory Auditors as well as Branch Auditors of the Company for a second term of five years from the conclusion of 68th AGM till the conclusion of 73rd AGM of the Company to be held in the year 2027, to examine and audit the accounts of the Company for five consecutive financial years between 2022-23 and 2026-27.
T he Auditors Report for 2022-23 does not contain any qualifications, reservations or adverse remarks, except for Key Audit Matters.
19. Cost Auditors
T he Company has maintained the accounts and cost records as specified by the Central Government under Section 148(1) of the Companies Act, 2013. The Board had appointed M/s. Sagar and Associates, Cost Accountants as the Cost Auditors for 2022-23, and they have been reappointed as Cost Auditors of the Company for 2023-24. Approval of the Members is being sought for ratification of their remuneration at the ensuing AGM.
20. Secretarial Auditor
M/s . N. L. Bhatia and Associates, the Practicing Company Secretaries were appointed as Secretarial Auditor to undertake the Secretarial Audit of the Company for the year 2022-23. Their Secretarial Audit Report, in prescribed Form No. MR-3, is annexed to the Directors Report as Annexure IV, and does not contain any qualification, reservation or adverse remarks. M/s. N. L. Bhatia and Associates have been reappointed as the Secretarial Auditor for 2023-24.
21. Audit Committee
T he Audit Committee comprises Mr. Zubin Dubash
(Chairman), Mr. Debendranath Sarangi and Mr. Arun Kumar Adhikari, all Independent Directors, in line with Section 177 of the Act. The Board accepted the recommendations made by the Audit Committee from time to time. Details of Audit Committee Meetings held during the year 2022-23 are disclosed in the Corporate Governance Report.
22. Internal Financial Controls
The Internal Financial Controls (IFCs), its adequacy and operating effectiveness is included in the Management Discussion and Analysis, which forms part of the Annual Report. The Auditors Report also includes their reporting on IFCs over Financial Reporting.
23. Reporting of Fraud
No instances of fraud were reported by the Auditors under Section 143(12) of the Companies Act, 2013.
24. Risk Management
Pursuant to Section 134(3)(n) of the Act and Regulation 21 of Listing Regulations, the Company has a Risk Management Committee (RMC) comprising Mr. Zubin Dubash (Chairman), Mr. Debendranath Sarangi and Mr. Arun Kumar Adhikari, all Independent Directors. The Company has formulated a Risk Management Policy to establish an effective and integrated framework for the Risk Management process. During 2022-23, three Meetings were held on 27 June, 2022, 30 September, 2022 and 21 March, 2023, wherein, the top 10 risks and relevant mitigation measures identified for the Company were reviewed and discussed.
During 2022-23, the Company had appointed Ernst & Young (E&Y) to conduct an Enterprise Risk Management (ERM) study for Voltas. This exercise has been completed and as advised by E&Y, the Company had adopted an ERM Standard, ERM Policy and revised RMC Charter. The ERM Policy is to establish a common organisation-wide understanding of ERM and outline desired actions and behaviours from key stakeholders and forms the basis for implementing the Risk Management framework across the Company. The ERM Standard sets out the objects and elements of Risk Management process within the organisation and help to promote the Risk-aware corporate culture. The RMC Charter defines the roles and responsibilities of the Risk Management Committee and other requirements.
25. Particulars of Employees
The information required under Section 197 of the Act, read with Rule 5(1) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014, are given below:
(a) The ratio of each Directors remuneration, to the median remuneration of the Companys employees for 2022-23:
| Directors | Ratio to Median Remuneration |
| Mr. Noel Tata | 2.02 |
| Mr. Vinayak Deshpande | 0.30 |
| Mr. Debendranath Sarangi | 4.55 |
| Mr. Bahram N. Vakil | 4.36 |
| Ms. Anjali Bansal | 3.87 |
| Mr. Arun Kumar Adhikari | 4.37 |
| Mr. Zubin Dubash | 4.73 |
| Mr. Saurabh Agrawal | 0.24 |
| Executive Director | |
| Mr. Pradeep Bakshi Managing Director & CEO | 65.43 |
Note: Ratio of Remuneration of Directors was computed based on sitting fees paid during 2022-23 and commission paid for 2021-22 in 2022-23. However, in line with the internal guidelines, no commission was paid to Mr. Vinayak Deshpande and Mr. Saurabh Agrawal for 2021-22, as they were in full-time employment with another Group company. They were paid sitting fees only.
(b) The percentage increase in remuneration of each Director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in 2022-23:
| Directors, Chief Executive Officer, Chief Financial Officer and Company Secretary | % Increase in Remuneration in 2022-23 over 2021-22 |
| Mr. Noel Tata | * |
| Mr. Pradeep Bakshi | 22.20 |
| Mr. Vinayak Deshpande | (41.51) |
| Mr. Debendranath Sarangi | 17.51 |
| Mr. Bahram N. Vakil | (9.50) |
| Ms. Anjali Bansal | (16.49) |
| Mr. Arun Kumar Adhikari | 12.82 |
| Directors, Chief Executive Officer, Chief Financial Officer and Company Secretary | % Increase in Remuneration in 2022-23 over 2021-22 |
| Mr. Zubin Dubash | (1.00) |
| Mr. Saurabh Agrawal | (46.81) |
| Mr. Jitender P. Verma | ** |
| (Chief Financial Officer) | |
| Mr. V. P. Malhotra | 12.37 |
| (Company Secretary) |
* As no commission was paid to Mr. Noel Tata for 2021-22, being in employment with another Group company, the percentage increase in his remuneration is not comparable and hence, not mentioned.
** Since remuneration for 2021-22 is for part of the year, the percentage increase in his remuneration is not comparable and hence, not mentioned.
(c) Percentage increase in the median remuneration of employees in 2022-23:
15.38%
(d) Number of permanent employees on the rolls of the Company:
1,689 employees.
(e) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof, and point out if there were any exceptional circumstances for increase in managerial remuneration:
Average percentile increase in salary of employees other than managerial personnel was 8.67%. Average percentile increase in managerial remuneration was 12.11% in 2022-23 over 2021-22.
(f) Affirmation that the remuneration is as per the Remuneration Policy of the Company:
The Company affirms that the remuneration paid was as per the Remuneration policy of the Company.
(g) A statement containing names of top ten employees, in terms of remuneration drawn and the particulars of employees as required under Section 197(12) of the Act, read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate Annexure in this Report. Further, the Report and the Accounts are being sent to the Members, excluding the aforesaid Annexure. In terms of Section 136 of the Act, the said Annexure is open for inspection at the Registered Office of the Company. Any Shareholder interested in obtaining a copy of the same may write to the Company Secretary. None of the employees listed in the said Annexure are related to any Director of the Company.
26. Employee Stock Option, Sweat Equity and Equity Shares with Di_erential Voting Rights
The Company did not issue any Employee Stock Options, Sweat Equity shares and Equity shares with differential voting rights.
27. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo
Information pursuant to Section 134(3)(m) of the Act relating to conservation of energy, technology absorption, foreign exchange earnings and outgo is given as Annexure III to this Report.
28. Directors and Key Managerial Personnel (KMP)
During the year under review, there has been no change in Directors and KMP of the Company.
In accordance with the provisions of the Act and the Companys Articles of Association, Mr. Noel Tata and Mr. Saurabh Agrawal retire by rotation and being eligible, offer themselves for re-appointment.
During the year under review, the Non-Executive Directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees, commission and reimbursement of expenses incurred by them (if any) for the purpose of attending Meetings of the Board/Committees of the Company.
Mr. Pradeep Bakshi (Managing Director & CEO), Mr. Jitender Pal Verma (Chief Financial Officer) and
Mr. V. P. Malhotra (Head-Taxation, Legal and Company Secretary) are the Key Managerial Personnel (KMPs) of the Company, in line with the requirements of Section 203 of the Act.
M r. Pradeep Bakshi, Managing Director & CEO of Company is also the Managing Director of Universal MEP Projects & Engineering Services Limited (UMPESL), a 100% wholly-owned subsidiary of the Company.
Mr. Pradeep Bakshi does not draw any remuneration from UMPESL. No other Director is the Managing or Whole-time Director of any subsidiary of the Company.
29. Declaration by Independent Directors
P ursuant to Section 149(7) of the Act, the Company received declarations from all Independent Directors confirming that they meet the criteria of independence as specified in Section 149(6) of the Act, as amended, read with Rules framed thereunder and Regulation 16(1)(b) of the Listing Regulations. In terms of Regulation 25(8) of the Listing Regulations, the Independent Directors have confirmed that they are not aware of any circumstance or situation which exists or may be reasonably anticipated that could impair or impact their ability to discharge their duties with an objective independent judgement and without any external influence and that they are independent of the Management. The Board of Directors of the Company have taken on record the declaration and confirmation submitted by the Independent Directors after undertaking due assessment of the veracity of the same.
The Board is of the opinion that the Independent possess the requisite qualifications, experience, expertise and they hold high standards of integrity.
The Independent Directors have complied with the for Independent Directors prescribed in Schedule IV to the
Act and have also confirmed that their registration with the databank of Independent Directors maintained by the Indian Institute of Corporate Affairs is in compliance with the requirements of the Companies (Appointment and Qualifications of Directors) Rules, 2014.
30. Business Responsibility and Sustainability Report
Pursuant to Regulation 34(2)(f ) of Listing Regulations, as amended, the Business Responsibility and Sustainability Report in prescribed format forms part of this Annual Report.
31. Corporate Governance
Pursuant to Schedule V of Listing Regulations,
Management Discussion and Analysis, Corporate Governance Report and Auditors Certificate regarding compliance of conditions of Corporate Governance forms part of the Annual Report. A declaration signed by the Managing Director in regard to compliance with the Code of Conduct by the Board Members and Senior Management Personnel also forms part of the Annual Report. Code of Conduct and various other policies are available on the website of the Company at the link: https://www.voltas.com/about/corporate-governance
32. Details of the Establishment of Vigil Mechanism for Directors and Employees
T he Company has adopted a Whistle Blower Policy ("the
Policy") as required under Section 177(9) of the Act and Listing Regulations. The Policy provides a mechanism for Directors and employees of the Company to approach the Ethics Counsellor/Chairman of the Audit Committee of the Company in case of any concern. The Whistle Blower Policy can be accessed on the Companys website at the link: https://www.voltas.com/images/_ansel_image_ collector/WHISTLE_BLOWER_POLICY_1.pdf
33. Particulars of Loans, Guarantees or Investments under Section 186 of the Act during 2022-23
Details of loans, guarantees and investments covered under the provisions of Section 186 of the Act, made during the year as also given in the Notes to the financial statements are given below:
| Name of the Entity | Nature of Transaction | Particulars of Loan, Guarantees given or Investments made during 2022-23 | Purpose for which the loans, guarantees and investments are proposed to be utilised | ||
| Loan/ ICD (? in crores) | Investment (? in crores) | Guarantee (? in crores) | |||
| LIC Housing Finance Limited | Inter Corporate Deposit (ICD) | 85.00 | -- | -- | General Corporate purpose |
| UP Power Corporation Limited | Investment in Bonds | -- | 25.64 | -- | General Corporate purpose |
| ICICI Home Finance Limited | ICD | 110.001 | -- | -- | General Corporate purpose |
| Mahindra & Mahindra Financial Services Limited | ICD | 70.002 | -- | -- | General Corporate purpose |
| L&T Finance Limited | Investment in Bonds | -- | 42.273 | -- | General Corporate purpose |
| Bajaj Finance Limited | Investment in NCDs | -- | 9.93 | -- | General Corporate purpose |
| Housing Development Finance Corporation Limited | Investment in NCDs | -- | 30.45 | -- | General Corporate purpose |
| Universal MEP Projects & | Subscription of | -- | 1,190.00 | -- | Strategic investment |
| Engineering Services Limited* | Rights equity shares Guarantee to Bank | -- | -- | 750.00 | Business purpose, as a collateral |
| Voltbek Home Appliances Private Limited# | Subscription of Rights equity shares | -- | 122.50 | -- | Strategic investment |
* wholly-owned subsidiary # Joint-venture company
1. including ? 30 crores repaid during the year. As on 31 March, 2023, the outstanding amount was ? 80 crores.
2. including ? 50 crores repaid during the year. As on 31 March, 2023, the outstanding amount was ? 20 crores.
3. Entire amount of ? 42.27 crores redeemed on maturity during the year.
34. Particulars of Contracts or Arrangements with Related Parties
During the year under review, the Company did not have any contracts or arrangements with related parties in terms of Section 188(1) of the Act, except the consummation of the Business Transfer Agreement (BTA) earlier executed in March 2021 for transfer of domestic B2B businesses to UMPESL on a slump sale basis, whereby the existing contracts/agreements/arrangements have been assigned/novated by Voltas to UMPESL. Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Act in Form No. AOC-2 for 2022-23 forms part of this Annual Report as Annexure V.
35. Secretarial Standards
The Company has complied with the provisions of Secretarial Standards on Meetings of the Board of Directors (SS-1) and on General Meetings (SS-2).
36. Details of Significant and Material Orders passed by the Regulators/Courts/Tribunal
No significant and material orders were passed by the Regulators or the Courts or Tribunals impacting the going concern status and Companys operations in future.
37. Proceeding under Insolvency and Bankruptcy Code, 2016
There are no proceedings, either filed by the Company or against the Company, pending under the Insolvency and Bankruptcy Code, 2016 as amended, before the National Company Law Tribunal or other Courts as on 31 March, 2023.
38. Deposits from Public
The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the 31 March, 2023.
39. D irectors Responsibility Statement
Based on the framework and testing of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory, cost and secretarial auditors and external agencies, including audit of internal financial controls over financial reporting by the Statutory Auditors and the reviews performed by Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Companys internal financial controls were adequate and effective during the financial year 2022-23. Accordingly, pursuant to Section 134(5) of the Act, the Board of Directors, based on the assurance given of the business operations, to the best of their knowledge and ability, confirm that:
(i) in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;
(ii) they have, in the selection of the accounting policies, consulted the Statutory Auditors and have applied their recommendations consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of financial year and of the profit of the Company for that period;
(iii) they have taken proper and sufficient care to the best of their knowledge and ability, for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) they have prepared the annual accounts on a going concern basis;
(v) they have laid down internal financial controls to be followed by the Company and that such internal financial controls were adequate and operating effectively; and
(vi) they have devised proper system to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
4 0. Annual Return
Pursuant to Sections 92(3) and 134(3)(a) of the Act, the
Annual Return for 2022-23 is available on the Companys website at the link: https://www.voltas.in/file-uploads/ general/Voltas_AnnualReturns_FormMGT-7_2022-23.pdf
41. Disclosure as per the Sexual Harassment of
Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
T he Company has zero tolerance for sexual harassment at workplace and has adopted a ‘Respect for Gender Policy on prevention, prohibition and redressal of sexual harassment in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (‘POSH Act) and the Rules there under. As per the requirement of POSH Act, the Company has formed an Internal Committee to address complaints pertaining to sexual harassment at work place. The Company did not receive any complaint during 2022-23.
42. Other Disclosures
Dur ing the year, there were no transactions requiring disclosure or reporting in respect of matters relating to:
(a) issue of equity shares with differential voting rights as to dividend, voting or otherwise;
(b) issue of shares (including sweat equity shares) to employees of the Company under any scheme;
(c) raising of funds through preferential allotment or qualified institutional placement;
(d) instance of one-time settlement with any bank or financial institution.
43. General
The Notes forming part of the Accounts are self-explanatory or, to the extent necessary, have been dealt with in the preceding paragraphs of the Report.
On behalf of the Board of Directors
Noel Tata
Chairman Date: 26 April, 2023 Place: Mumbai
2024, IIFL Securities Ltd. All Rights Reserved
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- No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account."
www.indiainfoline.com is part of the IIFL Group, a leading financial services player and a diversified NBFC. The site provides comprehensive and real time information on Indian corporates, sectors, financial markets and economy. On the site we feature industry and political leaders, entrepreneurs, and trend setters. The research, personal finance and market tutorial sections are widely followed by students, academia, corporates and investors among others.
Risk Disclosure on Derivatives
- 9 out of 10 individual traders in equity Futures and Options Segment, incurred net losses.
- On an average, loss makers registered net trading loss close to Rs. 50,000.
- Over and above the net trading losses incurred, loss makers expended an additional 28% of net trading losses as transaction costs.
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Copyright © IIFL Securities Ltd. All rights Reserved.
Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213, IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248
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