Voltas plans overseas buys for expansion

The Mumbai-based company said it was aiming to generate more cash on its balance sheet to buy potential targets. Voltas has Rs 300 crore net cash available on its balance sheet, said M M Miyajiwala, executive vice-president (finance) and CFO, Voltas.

"The company will have to satisfy certain technical requirements to enter new geographies that could need partnerships or acquisitions," he said. Voltas has bagged its biggest international MEP order worth Rs 800 crore in Qatar that will be executed over 30 months.

The Tata Group company plans to enter Africa, Vietnam and other new markets to expand the business, which earns more than half of its revenue. Currently, Voltas is totally concentrating on Saudi Arabia, Qatar, Singapore and other West Asian countries. Its MEP division registered 21 per cent growth during FY08 with an order book of Rs 4,600 crore.

The order book for international projects zoomed by 140 per cent to Rs 3,800 crore from Rs 1,600 crore a year ago. Until the previous financial year, West Asia comprised 90 per cent of the company's MEP operations. Voltas made its debut in Singapore by bagging the district cooling plant project at the Sentosa Integrated Resort.

The company has projected that inflation and weakening of the dollar could push the labour costs in international markets. Miyajiwala said, "The inflation could lead to increases in manpower costs by 15-20 per cent. The depreciation of the dollar is a concern as orders in West Asia are pegged to the dollar."

The company's domestic MEP order book is Rs 800 crore. The Indian contracts have ballooned on the back of retail, infrastructure, hospitality and SEZ growth in the country. Voltas has restructured the sales and marketing teams to drive better efficiency in executing MEP projects.

In India, it has executed the MEP contract of the new Hyderabad international airport and received orders for other projects like Dibrugarh Airport, Fortis Healthcare and Neptune Mall.