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Voltas Ltd.

BSE: 500575 Sector: Others
NSE: VOLTAS ISIN Code: INE226A01021
BSE LIVE 19:40 | 19 Oct 533.80 -4.85
(-0.90%)
OPEN

540.00

HIGH

540.00

LOW

531.15

NSE 19:45 | 19 Oct 533.35 -4.10
(-0.76%)
OPEN

538.85

HIGH

538.85

LOW

530.80

OPEN 540.00
PREVIOUS CLOSE 538.65
VOLUME 11566
52-Week high 564.95
52-Week low 287.00
P/E 32.51
Mkt Cap.(Rs cr) 17,663
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 540.00
CLOSE 538.65
VOLUME 11566
52-Week high 564.95
52-Week low 287.00
P/E 32.51
Mkt Cap.(Rs cr) 17,663
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Voltas Ltd. (VOLTAS) - Chairman Speech

Company chairman speech

1994 VOLTAS LIMITED STATEMENT OF THE CHAIRMAN, A. H. TOBACCOWALA TO THE SHAREHOLDERS 1. Shareholders of Voltas can look back with satisfaction at the past forty years of steady growth, of satisfactory returns and an enviable reputation. Equally, we can look forward to a future of accelerated development and rising profitability. In each of these forty years your Company has paid a dividend and, except in 1984-85, achieved a higher turnover. The Year in Retrospect: 2. In my Statement to you last year I had urged that the widespread practice of judging the financial performance of a company by EPS should be replaced by the criteria of Return on Net Worth as "Aanagement should be accountable for the return on the entirety of Shareholders' funds rather than on that portion which is represented by equity capital". l am glad that not only in 1993-94 but for the decade 1984-85 to 1993-94 Voltas significantly exceeded the average performance of the Economic Times 101 Private Sector Giants both in terms of growth of Net Worth as well as of PAT. We also did better in these years than almost all of the seven comparable engineering companies to which I referred last year. 3. In 1993-94 Voltas earned the highest profit in its history. The large non-operating income we received was almost entirely offset by the loss we had to absorb on the Allwyn Unit for the year prior to BlFR's Order amalgamating Allwyn with Voltas. However, high profitability is not the only measure of our recent accomplishments. Already yielding positive benefits is the re-structuring process of Voltas started two-and-a-half years ago to take advantage of opportunities and to face the challenges of the radically changed external environment. In the past year, we exited from several businesses in which we could not become major players: beverages, food products and pharmaceutical distribution. The Electrical Business is now being operated through two wholly-owned subsidiaries which will facilitate technology upgradation and appropriate reorganisation of these businesses which are inherently different from most of the other activities in which your Company is engaged. 4. The most important development is, of course, the amalgamation into Voltas of Hyderabad Allwyn Limited excluding its Watch and Auto Divisions which were of no interest to us. We are grateful to the Andhra Pradesh Government for agreeing to absorb a little more than half of the large losses incurred by Allwyn in the period before the BIFR approved its retrospective amalgamation. The Allwyn Unit can be an invaluable asset as it more than doubles our refrigerator capacity, secures entry into other promising businesses and brings into Voltas a core of skilled and experienced employees. We have already successfully implemented a Voluntary Retirement Scheme which, on acceptable terms, has separated a significant number of surplus employees earlier recruited in Allwyn for non-commercial considerations. Though the manufacturing activities at Allwyn had ceased for over twenty months, we have been able to quickly re-establish production to a level of over 11,000 refrigerators per month which output should be considerably enhanced as the rehabilitation programme proceeds. Our aim is to convert the enormous potential of Allwyn into production capacity and performing assets. 5. In recommending to you an increased dividend of 30%, your Board had to balance the higher profit figures for 1993-94 with the knowledge that the process of the rehabilitation of the Allwyn Unit can take place only during this and following years as vital capital equipment that we need will not be installed till the last months of the current financial year, which will be a difficult one. Our Core Business: 6. Voltas is the premier Indian Company in airconditioning and refrigeration with the widest product range: refrigerators, water coolers, room airconditioners of all kinds, packaged units and large central plant. We believe that in these products we have unmatched experience in marketing, installation and servicing. 7. The liberalisation process of the last three years has been sincerely welcomed by companies such as ours which have for decades operated under the straight-jacket of irrational controls. However, the new environment which gives us much greater operational freedom, easier access to technology, and minimal import controls also poses the challenges of increased competition and greater customer expectations. 8. Members are undoubtedly aware that the potentially large Indian market for white goods -- refrigerators, washing machines and the like -- has attracted the major multinationals who have acquired a controlling interest in several of the hitherto Indian-owned and managed companies. This unquestionably poses a threat to Indian companies. The danger we apprehend is not the technology that MNCs can bring or the design and quality of the products that they can quickly introduce--because in these respects it is our obligation to match what our competitors offer. Our concern is the ability of MNCs to pour very large sums into increasing their market share by selling products for long periods at prices which do not cover costs and by large dealer incentives. The losses incurred in such a policy of gaining market share and driving out competition would be negligible in relation to the world-wide profits and resources of the MNCs whereas Indian companies cannot sustain such deficits. 9. Your Board has decided that while we will seek technology and establish strategic alliances or partnerships in certain high technology areas, in the principal consumer durables business Voltas should retain managerial and ownership control. We are endeavouring to upgrade to international standards our product designs, quality and service and greatly increasing our R&D. New consumer durables will be progressively launched. 10. It has been my personal good fortune that in my many years in Telco I was closely associated with Mr. Sumant Moolgaokar. From him I learnt much, including the importance of courage in times of business adversity, the ability of teams of carefully-selected Indian technical personnel inspired by visionary leadership to design and produce to international standards, the need for uncompromising product quality and outstanding service. I am grateful that most of my colleagues on the Voltas Board share this outlook and have confidence in our Company's ability to upgrade products, improve quality, market effectively and provide customer satisfaction A Vision of Voltas: 11. Your Directors are clear that it would be inappropriate for Voltas to undertake mega projects involving investments of hundreds or thousands of crores as so many other companies are doing. We believe our present and contemplated businesses have great growth potential. Also that we must have sustained high profitability to provide attractive returns for our investors . 12. For years we have interpreted the three arrows in the Voltas logo as representing our involvement in Manfacturing, Marketing and Engineering. While we remain very much committed to these activities, l believe a re- interpretation of the three arrows in our logo is appropriate in the new environment in which we operate and in which we do desire to maintain our identity as a company that is different. 13. One arrow must represent the vigour our organization needs--the muscle, the will, the ability to do and to get things done. We have now to respond more quickly to change -- in technology, in markets, in customer expectations, in the financial environment and in the global economy. This entails not only attitudince changes but also greater team work utilising the revolutionary technologies now available for better management. 14. The second arrow represents the vision we need, the strategic plan we must follow, the ability to foresee and anticipate change, the capacity to differentiate between a growth opportunity and a disastrous gamble, Poor execution of a well conceived strategy will yield less than optimal results but a misconceived strategy is disastrous even with the best management. 15. Many companies do have Vigour and Vision,-- some highly successful ones have exhibited these in greater measure than Voltas has hitherto demonstrated. However, it is to the third arrow--Values--to which we should attach special importance. In addition to some important characteristics we inherited from our Swiss Volkart ancestry, we have imbibed much from The great Tata tradition--exemplified not only by Jamsetji and J.R.D. Tata but also by the several other Tata stalwarts who have been closely associated with Voltas or have influenced senior Executives and Directors of Voltas. 16. I do hope that concern for the larger community-- extending much beyond our investors, customers, employees and associates--will continue to inspire our Company. It is easy and painless to donate money to worthwhile causes; it is much more difficult to devote managerial resources and time to projects intended to benefit some of the unfortunate masses who constitute the majority of our countrymen. Our association with several foundations has brought us recognition which, while unsought, does encourage our further efforts. However, that is not enough. 17. It is fortunate that many of our Board of Directors accept that Voltas should earmark quite modest resources to actively create opportunities for greater productive employment; to develop and implement specific technologies which increase rural welfare and similar objectives. The success of the Voluntary Retirement Schemes in Voltas and in its Allwyn Unit, though essential for the well being--and even survival --of our Company, can give us little satisfaction unless we can create in other ways, and through other organizations even larger employment opportunities. The activities and organizations we promote and support with limited funding and managerial assistance must be inheritably viable and self-sustaining within a predetermined period. By pursuing this and other similar objectives we can be not only a highly profitable and progressive company but also a somewhat different one, continuing the traditions we have inherited. 18. On a. personal note I would like to record my thanks to mv colleaaues on the Board and in Management for the support and co-operation received during my tenure as Executive Chairman, a position which I relinquished on 1st April, 1994. I am delighted that for the first time the Chief Executive of Voltas has been appointed from within the organization. Mr. Munshi, the new M.D., knows Voltas well and can be relied upon not only to maintain the growth and profitab'ility of the Company but also to preserve those elements of our tradition and culture which have abiding value. The coming years will be exciting and challenging for Voltas as for the country. I have no doubt that with the support of all our shareholders and the Financial Institutions our Company can accelerate its growth and while improving its profitability retain its specific identity which has earned for it a reputation and image disproportionate to its financial position. A. H. Tobaccowala Chairman Bombay, 29th July, 1994.