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Voltas Ltd.

BSE: 500575 Sector: Engineering
NSE: VOLTAS ISIN Code: INE226A01021
BSE 00:00 | 27 May 1008.70 12.05
(1.21%)
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993.70

NSE 00:00 | 27 May 1008.45 12.60
(1.27%)
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OPEN 1007.55
PREVIOUS CLOSE 996.65
VOLUME 41725
52-Week high 1356.90
52-Week low 923.50
P/E 57.21
Mkt Cap.(Rs cr) 33,378
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1007.55
CLOSE 996.65
VOLUME 41725
52-Week high 1356.90
52-Week low 923.50
P/E 57.21
Mkt Cap.(Rs cr) 33,378
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Voltas Ltd. (VOLTAS) - Director Report

Company director report

To the Members

Your Directors present their Sixty-Seventh Annual Report and theAudited Statement of Accounts for the year ended 31 March 2021.

1. Financial Results

Rs in crores
Consolidated Standalone
2020-21 2019-20 2020-21 2019-20*
Total Income 7745 7889 6598 7457
Profit for the year after meeting all expenses but before interest 830 917 782 905
depreciation and exceptional items
Interest 26 21 19 9
Depreciation and amortization 34 32 30 29
Profit before exceptional items 770 864 733 868
Share of Profit/(Loss) of Joint Ventures and Associates (61) (69) - -
Exceptional items (Net) - (51) - (55)
Profit before tax 709 744 733 813
Tax expenses 180 223 163 218
Profit after tax 529 521 570 595
Other Comprehensive Income (Net) 321 (190) 329 (210)
Total Comprehensive Income 850 331 899 385

* Pursuant to the Scheme of Merger as approved by the National CompanyLaw Tribunal Mumbai on 11 September 2020 Universal Comfort Products Limited a whollyowned subsidiary company has been merged with the Company effective 1 April 2019(Appointed Date). Consequently the effect of the Merger has been considered in the abovefinancial results in accordance with Ind AS 103 – ‘Business Combinations'and the stand-alone financial results for 2019-20 presented above have been restated.

2. Operations

It's been over a year since COVID-19 was declared a pandemic.While multiple levels of lockdowns have been witnessed across the globe in India theearlier sense of a successful disease containment no longer exists. The second wavecurrently being experienced can be described as a tsunami with greater severity andimpact across sections of the society. Human death toll apart there are signs of extremesocial and economic challenges all across the world. The efficacy of vaccines givenmultiple mutations of the virus remains a question mark although they hold out thepromise of reducing the severity and frequency of infections. On a positive note thereare however several green shoots of gradual recovery from the pandemic hopefully leadingto a stronger rebound across the length and breadth of the world.

Along with the twist and turns of the pandemic and political tensionsthe year also witnessed significant events - North American markets cheered the results of

US elections Brexit became a reality and in the Middle East the USbrokered a deal between key Regional players paving the path for normalised relations.Before India got stuck with second wave Q4 showed an upliftment in general business andconsumer confidence. Manufacturing and Service PMI (Purchasing Manager's Index) hadpicked up GST collections touched an all-time high Auto sales achieved double-digitgrowth and Job markets had shown signs of steady recovery. Meanwhile prices of keycommodities such as copper steel plastics etc. have increased by around 70% while seafreight has grown over 3 times. The IMF (International Monetary Fund) has projected astronger recovery in 2021 and 2022 for the global economy compared to their previousforecast with growth projected to be 6% in 2021 and 4.4% in 2022. Projections for Indiaremains buoyant with projected growth of 12.5% in 2021 and 6.9% in 2022. However the juryis still out as the impact of the second wave remains rather indeterminate amidst alreadystressed Government resources. Lockdown in Q1 the peak season of Unitary cooling businessaffected the growth of the AC industry and the Company. However the strength of theVoltas brand and its enviable distribution network shone through each of the otherQuarters helping the business post a strong recovery both across top and bottom line.Voltas ended the year with a minimal de-growth of 13% as compared to previous year theperformance being backed by pent up demand and Channel partner eagerness to secure theirshare of inventory amidst fears of supply chain disruptions and price escalation.Appropriate focus on the Inverter sub-category with competitive pricing and larger numberof SKUs has yielded a favourable outcome – Inverter growth in Q4 was 22.5% ahead ofthe previous year and now contributes over 77% of Split ACs sold in Q4 compared to 70%for the similar period in the previous year. That apart Voltas continued to maintain aYTD February 2021 market share of 22% in Inverter ACs. In terms of the overall AC marketVoltas continued to retain its undisputed leadership with a YTD February 2021 market shareof 25.6% at multi-brand outlets. Substantial build-up of Air Cooler inventory with Tradeowing to the lockdown which had disrupted the limited seasonal window available for itssale impacted the performance of the Air Cooler vertical. However acceptance of freshSKU models by the market exports and achievement of a breakthrough with certain keydealers and increasing billing points helped recovery of lost sales. Based on January 2021exit numbers Voltas is now at the number two position having achieved a market share of10.6%. At the same time Channel expansion together with a healthier model mix andgreater B2B account focus helped deliver a stellar performance in the CommercialRefrigeration vertical. Labour shortage owing to multiple lockdowns and demand reductionimpacted project business. Given the overall subdued sentiment there were hardly anyfresh investments from the Private sector and Project completion has continued to remainin limbo amidst serious liquidity concerns. However the deemed ‘essentialservices' tag for project activities in Middle East ensured the pace of existingwork and security from the travails of COVID-19. Unfortunately the Project businesscontinues to experience a client driven propensity to delay certifications postpone grantof extension of time (EOTs) although contractually entitled and a tendency to withholdpayment against due receivables.

Nevertheless given the difficult times and circumstances the Companyhas performed well and has reported a consolidated total income from operations of Rs7745 crores a marginal dip of 2% as compared to Rs 7889 crores last year and aconsolidated profit before tax of Rs 709 crores as compared to Rs 744 crores in previousyear.

The Company's Balance Sheet continues to remain healthy withminimal borrowings which are required primarily for the overseas operations. Whileoperational cash flow during the first six months have been weak given the context of thelockdown and AC sales lost out in the peak season recovery of product sales in laterperiods amidst focus on collection in the project business has strengthened the cash flowby end of the year.

There have been no material changes and commitments that affect thefinancial position of the Company which have occurred between the end of the financialyear to which the financial statements relate and the date of this Report.

3. COVID_19: Impact on Business Operations

The outbreak of COVID-19 pandemic led to an unprecedented healthcrisis. It severely disrupted economic activities and global trade while weighing onconsumer sentiments. The pandemic has suddenly forced a new way of life for the world toadapt. Voltas judiciously analysed and assessed fundamental ways in which the pandemicaltered its operations highlighting new priorities capabilities and outlooks. As theCOVID-19 pandemic began to spread around the world from the end of January 2020 Voltasfirst ensured the safety and health of its employees. The Company actively gatheredCOVID-19 related information needed to create awareness and implement appropriate safetymeasures amongst employees. The risk-intelligent culture embedded across the Companyhelped develop and adopt a multi-pronged strategy. It effectively helped respond to theevolving pandemic situation. Employees and communities' health and safety continuedbeing the foremost priority. Voltas focussed on running operations safely and efficientlyto service its customers. Further Handy Train the Company's mobile application wasextensively used to create awareness about the safety measures and precautions required tocombat COVID-19. Voltas prudently adopted ‘Work from Home' (WFH) policy evenbefore the lockdowns were announced. Employees were provided necessary software tofacilitate a smoother remote working experience without any technical interruptions. Avirtual meeting room software ‘Cisco' was also set up to ensure smoothfunctioning of all business functions. Initiatives like awareness programmes related toCOVID-19 technical trainings and programmes at the Voltas' Virtual Campus incollaboration with SkillSoft (a 24*7 learning platform) among others helped build aculture of continuous learning despite lockdowns.

The pandemic not only affected many aspects of the Company'soperations but also brought along several changes in market conditions. Voltas'operations in the manufacturing and project sites witnessed a temporary suspension. Thebeginning of the lockdown coincided with Room Air Conditioners (RAC) business' peakseason thereby impacting the performance of the Company. However the sales graduallypicked up with the easing of lockdowns. The business operations in the internationalmarkets also suffered with various governments imposing restrictions on businessactivities.

The Company's Unitary Cooling Products and Domestic ProjectsBusinesses continued partnering the nation during this period – catering essentialservices in the healthcare and infrastructure sector. Despite challenges the Projectteams were operational across 260 sites. They continued providing customers withoperational maintenance and breakdown support during this difficult time. Factors likethe non-availability of requisite skilled labour restricted access to job sites andmandatory social distancing norms considerably slowed down the pace of Project work at thebeginning of the year. The international operations of M&CE continued progressingfairly but the domestic operations took a hit due to the pandemic. It caused delays ininfrastructure projects and restricted running of mining sites. However easing oflockdowns and Indian Government's push on infrastructure projects rejuvenated demandfor the same. The Board of Directors proactively took cognisance of the economy'sslowdown and the liquidity crisis. Cross-functional teams were formed to manage supplychain and iron out logistic-related issues. All these efforts were put keeping theconstraints imposed by the lockdown in mind to ensure plant operations as planned.Provisions were made for delay in collection of receivables and various cash conservationmethods were also adopted. The Company undertook these measures along with cautious planson the capital expenditure without impacting the long-term strategic plans.

4. Reserves

An amount of Rs 20 crores was transferred to the General Reserve out ofProfit available for appropriation.

5. Dividend

The Company's Dividend Policy which is uploaded on theCompany's website is based on the need to balance the twin objectives ofappropriately rewarding its shareholders with dividend and of conserving resources to meetits future needs. Based on Company's performance and keeping in mind the shareholdersinterest in these difficult times the Directors recommend a higher dividend of

Rs 5 per equity share of Rs 1 each (500%) for the year 2020-21(2019-20: 400%). The dividend would result in a cash outflow of Rs 165.44 croresreflecting pay out of 29% well in line with the Company's Dividend Policy. Thedividend on Equity Shares is subject to the approval of the Shareholders at theSixty-Seventh Annual General Meeting (AGM) scheduled to be held on

27 August 2021. The Register of Members and Share Transfer Books ofthe Company will remain closed from 13 August 2021 to 27 August 2021 (both daysinclusive) for the purpose of payment of the dividend for the financial year ended 31March 2021 and the AGM.

6. Finance

Despite the significant cost and liquidity pressures exerted by thepandemic the Company continued with a strong balance sheet and negligible borrowing. Onone hand cash reserves were systematically nurtured to ensure adequate liquidity to rideout potential disruptions. On the other hand Voltas retained its capacity to fund itsfuture growth ambitions comprehensively. The minimal borrowing in the Company'sbalance sheet represents fund-based borrowings for Voltas' overseas operations;domestic borrowing being largely confined to non-fund-based facilities. Meanwhile anexternal rating agency reconfirmed the credit rating of AA+ for the long-term and A1+ forshort-term borrowing thus helping the Company borrow at the most optimum rates. Whileday-to-day business decisions such as procurement of orders or extension of credit in themarket is based on a firm understanding of the risks entailed they are equally underlinedby the all-important ability to collect cash. That apart the difficulties of the currentenvironment further emphasized the organizational need to focus on austerity measuresconstantly driving synergy and keeping a tight rein on working capital. These actionsresulted in improved margins for the Company while also generating cash surplus during theyear. Notwithstanding the Company's best efforts the disruption in sales owing tothe lockdown in the peak season resulted in higher-than-expected inventory and overallworking capital for the Products segment. However multiple efforts and initiatives takenby the Company for securing the supply chain helped accrue cost savings and gainflexibility to bounce back during the post lockdown period especially in the later partof the year. The year also witnessed a steep increase across commodity prices which werepartly passed on to end customers. While product margins were protected the Company intandem ensured appropriate balance vis--vis its competitor offerings successfullyholding and increasing its market share. It is worthwhile to note that despite thelockdown-related loss of sales during the peak season in Q1 Voltas contained itsde-growth well below the industry level and continues to be the profitable market leaderin the Room Air Conditioner category. In the Project business over Rs 2800 crores of neworders were added in the domestic and international markets providing suitable revenuevisibility in the periods ahead. Compared to certain legacy orders the intrinsic qualityof new orders have improved as a result of additional due diligence risk identificationand mitigation not to mention the higher bid margins suggested by an internal ProjectReview Committee. The carry-forward order book for Domestic projects at Rs 4200 crorescomprised orders across Water HVAC Rural Electrification and Urban infra-activities. Theinternational order book of Rs 2435 crores represents MEP work mainly across UAE Qatarand Oman. However execution challenges at the beginning of the year cautious marginrecognition policy and conservative provisioning policy owing to the liquidity stress keptthe bottom line somewhat subdued. Despite early challenges better execution of runningprojects and improved cash collection especially in the later part of the year reducedthe impact of the pandemic and helped the Projects business segment post reasonableturnover and results for the year. With an eye on sustained profitable growth whileenhancing focus on both B2C and B2B verticals the Board during the year approved thetransfer of its domestic B2B businesses to its wholly owned subsidiary. Accordingly B2Bbusiness relating to MEP/HVAC and Water projects Mining and Textiles are proposed to betransferred to Universal MEP Projects & Engineering Services Limited(‘UMPESL') (formerly known as Rohini lndustrial Electricals Limited) by slumpsale through a Business Transfer Agreement executed on 24 March 2021. The proposedtransfer of businesses is subject to satisfaction of certain Conditions Precedent to theClosing Date and the Management is targeting 30 September 2021 as the Closing Date orsuch other date as may be mutually agreed between the Company and UMPESL. As a steptowards strengthening the capital structure of the wholly owned subsidiary (UMPESL) theCompany made an investment of Rs 150 crores by subscribing to the Rights Equity Shares ofUMPESL during the year under review.

Meanwhile the Manufacturing Plant of the Joint Venture companyVoltbek Home Appliances Private Limited (Voltbek) at Sanand completed its first year ofoperation. Despite various disruptions and multiple limitations on production and supplychain caused by the COVID-19 pandemic the factory successfully produced high-qualityDirect Cool (DC) refrigerators which were very well accepted in the market anddemonstrated significant demand pull from the trade. While the current emphasis is onmaximizing production to meet the increasing demand for DC refrigerators plans have beendrawn to also commence manufacture of Frost-free refrigerators over the coming monthsfollowed by Top load fully automatic washing machines. These measures represent a furtherstep towards localization and strengthening the overall supply chain. To facilitatecapital expansion and support the longer-term manufacturing strategy the Company has madefurther investment of Rs 75 crores during the year thereby increasing its totalinvestment in the joint venture to Rs 410 crores. Simultaneously the Company continued toaggressively leverage its distribution and other synergies to optimize the cost in linewith projections and meet its targets. The year 2020-21 witnessed significant volatilityin the interest rates owing to various measures undertaken by the Central Bank topurposefully infuse market liquidity and keep the economy afloat. These in turn had animpact on the average yield of the investment portfolio. The Company's investmentpolicy considers the three all-important aspects of safety security and liquidity inconsonance to which it currently has investments of over Rs 2000 crores (mutual fundsdebentures and bonds).

Exchange rates were fairly volatile during the year under review givenmultiple factors such as US elections woes of the pandemic and multiple interventions byCentral banks of various countries across the globe. Voltas has a well-defined forexpolicy based on which currency exposure was continuously monitored to hedge forward riskin a timely and efficient manner. Earnings from the Company's overseas projects inthe Middle East and Mining support activities in Mozambique also serves as a naturalhedge against exchange volatility.

Considering all the ramifications of the pandemic (including a completewashout of peak season in Q1) and the depressed Business environment during the year itis gratifying to note that the Company's total income for the full year at Rs 7745crores remained more or less in line with that of the previous year. At the PAT level theCompany was marginally ahead of the previous year at Rs 529 crores. Total ComprehensiveIncome was higher at

Rs 850 crores given the positive change in valuation of theCompany's investments. Voltas ended the year with an Earnings per share of Rs 15.87(Face Value per share of Rs 1) ahead of the previous year.

7. Tata Business Excellence Model (TBEM)

TATA Business Excellence Model (TBEM) is a framework followed byseveral TATA group companies to achieve excellence in their business performance. Toassess the progress made by various companies in the group the Tata Business ExcellenceGroup (TBExG) conducts external assessments across Tata companies. TBEM has been conceivedto deliver strategic direction and drive business improvements at the Tata group. Voltashas consistently benefited from the adoption of TBEM concepts for over two decades. TheUnitary Products Business Group and Voltas.Beko participated in the Data Maturity ExternalAssessment (DMA) based on the TCS ‘DATOM' framework in January 2021. Theobjective was to assess the progress made by Voltas in DATA Excellence. The Company'sscore was in the 75th percentile on the overall level. Based on the outcome of theExternal TBEM and DMA Assessments the Company developed and implemented comprehensiveaction plans to take its Business Excellence journey forward. Voltas has benchmarked theprocesses with the companies within and outside the Tata Group. The Company has developedmore than 80 Business Excellence champions 25 Data Excellence Champions and 8 DataMaturity Assessors to facilitate seamless progression on the Business Excellence journey.

Voltas has been recognised by the Tata Business Excellence Group for‘Building Business Excellence Champions Capability 2020' at the BEC virtualsession hosted on 12 January 2021. The recognition was conferred upon Mr. Pradeep BakshiMD & CEO Voltas Limited.

TBExG launched the TATA Competitive Intelligence (TCI) process on 14August 2020 with the objective of helping companies in the Group to effectivelyunderstand the market and competition through competitive intelligence. The bookletcontains eleven best practices followed in the TATA Group of which three practices arefrom Voltas.

1. Voltas: UPBG – Usage of Competitor Information in Multiple Ways

2. Voltas: TMD – Win/Loss Analysis

3. Voltas: TMD – Competitive Intelligence gained through TradeShows/Symposium Learning programs/missions were organised at other TATA companies tolearn/share on key areas like Customer

Network Management Quality Management System HR-Contract LabourManagement Innovation Management and other areas. Looking into the importance ofmanaging key accounts effectively KAM (Key Account Management) programs were implementedin Infra Projects and Product Solutions. After successful implementation the same wasinitiated in the Textile Machinery Division. Voltas kicked off the internal Improvementprogram initiatives at the manufacturing plant of UPBG (Product Solutions segment) atWaghodia. The plant started the 5S program and implemented 1S level successfully andachieved results on productivity space and inventory optimisation. The Companyparticipated and won the ‘Making Customers Smile' contest organised by the TATAGroup. The Company participated in Tata Ideas monthly eHackathon on Monetizing Assets andData Analytics and received innovative ideas for solution implementation. The Company alsoparticipated in Tata Innovista a Tata Group level contest to recognise and celebrate theinnovation. During 2020-2021 Voltas registered 9 entries in the TATA Innovista 2021 cycleand is awaiting the results.

8. IT Initiatives

The year 2020 brought along unprecedented challenges for everyone. TheCOVID-19 pandemic has impacted lives and livelihood like none before. With theannouncement of the lockdown in India in March 2020 remote work saw a steep rise making‘Work from Home' (WFH) the new norm. Voltas quickly adapted to the changes inthe external environment. The Company's IT team immediately responded to theemployees and stakeholders' changing needs. This also called for enhanced IT Securityand VPN to be provided to all employees for enabling WFH setup. Processes were changed toenable remote support and the transition was smooth with minimal disruption to work andzero security incidents. Right through the year several other improvements were carriedout to support IT Security and Infrastructure. Web Application Firewall (WAF) new VPNclient for enhanced security and ease of use NextGen EDR Solution for all endpoints andservers Managed File Transfer Solution New Test Environment for isolation of TestServers in the Data Centre and New Advanced Firewall for the Data Centre were some of themany IT Security initiatives undertaken and successfully completed. A lot of IT capacityand version upgrade activities were also completed – New network switches in the DataCentre New Power9 server for increased performance increase in backup capacity of DRServers and backup servers for all new locations new servers in the Windows Farm andincreased bandwidth of multiple links including DC-DR among others. One of the significantprojects under the IT Infra space included the seamless transition of support from theon-site team to TCS ICC. Thus increasing the support window and adoption of bestpractices.

Applications and Digital:

During the year the Company also witnessed various re-organisations.Under such circumstances the Company's IT team ensured that all the systems andapplications were configured perfectly in line with the Company's new structure.

Many new developments were undertaken and functionalities were addedacross all the major applications. Franchisee Payout Invoice Processing Automation AMCModules DSC Consignment Process Defective Spares Challan Process Alternate Material STOand Minimum Stock Level Fulfilment were some of the major projects undertaken in Siebeland SAP. Voltas has also added a number of new applications to its IT landscape forsupporting the core business processes. The Company emphasised and focused ondigitalisation. Several new applications processes and modules were added through Web andMobility Analytics Robotic Process Automation (RPA) and Integration with 3rd PartySystems.

Some key initiatives on Web and Mobility entailed Safety Portal VendorAssessment Portal Daily Project Reporting Discounting Portal and Fiori for PO andContract approval. Many new processes were also taken up for automation through RPA.Moreover a few new dashboards and interactive reports were developed on theCompany's Analytics platform. To eradicate manual interactions with 3rd Parties manynew interfaces were established with banks partners like Tata Cliq and externalapplications like Delhivery.

Collectively all the work and development during the year withregards to IT Security and Infra has helped Voltas transition to the new requirements.

9. Safety and Health

Voltas has always believed that a positive safety culture plays animperative role in the Company's values. Voltas places safety and health of itspeople at utmost priority. The Board through a S-H-E Committee periodically assessesamends and upgrades the requirements of the evolving safety culture. These changes andmodifications are executed in alignment with the Company's three-phased fiveyears' plan namely the Immediate Action Plan (Phase-I - September 2019 to March2020) Intermediate Action Plan (Phase-II - April 2020 to March 2022) and Sustainabilityof Action Plans (Phase-III - April 2022 to March 2025). The success of these changes iscritically evaluated and closely monitored by the Company's 3 tier committees –the S-H-E Board Committee and a Steering Committee comprising the Corporate ManagementGroup and Corporate SHE Committee. During the first phase Voltas recognised and trained47 safety leaders externally from each of the businesses. Apart from 100% internal siteaudits the Company successfully conducted training and created awareness within astipulated time. In the second phase Voltas further included training reinforcements ofthe top Management and BU Heads. This training was conducted via quarterly meetings of thesafety managers with the Company's MD & CEO and CHRO along with SHE CommitteeHead. Certification audit of ISO:9001 ISO:14001 and ISO:45001 for the Electrical business(RIEL) and ISO:14001 and ISO:45001 for Water management business were also successfullyconducted. Additionally surveillance audit of IMS (Integrated Management System) atO&M (Customer Care) and Pantnagar plant was completed. Moving to the Company'sdigitisation initiatives Voltas launched a new safety portal which integrates hazard andincident reporting a platform for vendors' management and a visitors'management system among others. During the year Voltas conducted competency-buildingtraining for 110 Safety Officers 123 Service Managers 900 Service Franchisee (SF)Owners and 2426 SF Technicians in UPBG Services. Additionally 247 participants fromUPBG Sales and Marketing teams were externally trained on road safety and defensivedriving techniques. After the successful completion of its ‘Road Safety'campaign the Company also launched ‘Working at Height' campaign for 2020-21. Atotal of 32 office locations were audited in the second phase and 47 local admin-in-chargewere trained internally. Further ensuring consistency and resilience of safety controlsVoltas audited 98 major projects and offices with a weighted score on the Tata GroupSafety Standards Compliances. This was done over and above the regular safety inspectionsand audits of sites manufacturing units customer care premises offices and warehouses.The successful and effective implementation of the first two phases of the Company'sfive years' plan helped run its business uninterruptedly even during the lockdown.Amid the pandemic a 24*7 helpline was launched to support and counsel the Company'semployees. It promptly introduced a ‘Work from Home' policy ensuringemployees' safety. The Company successfully conducted 118 virtual training sessionscreating awareness on COVID-19 precautions to be followed. These sessions witnessedparticipation of 1569 employees and 8269 workers across the organisation.

The improvement of Company's Safety Standards attracted lot ofpositive acknowledgement. The Company received several appreciation letters and awards inrecognition of its enhanced Safety Standards from various clients including RelianceIndustries and West Bengal State Electricity Distribution Company Limited.

10. Sustainability Development

For Voltas community is family. All its interventions for social goodare need-based and sustainable. The Company endeavours to reach out to themost-marginalised ones and those at the bottom of the pyramid. It believes in undertakingaffirmative actions for each of its CSR initiatives. With every passing year it has onlystrengthened its CSR interventions for optimum impact. The CSR framework has been designedin accordance to the Tata Ethos and adhering to the priority community needs. The Companykeenly observes the efficacy and relevance of the thrust areas defined in the framework.Currently it is carrying out all its activities under the broader gambit of threeimportant verticals - Sustainable Livelihood Community Development and Issues of NationalImportance. Sustainable Livelihood emphasises on skill-development and on makingmarginalised youth and women employable. Under the Community Development vertical itundertakes initiatives pertaining to quality education health and water. Under Issues ofNational Importance the Company aims to address national-level concerns such as disastermanagement affirmative action and sanitation. The Company's CSR department hasadopted the 3E principle of Engage Equip and Empower. This ensures empowerment of thecommunities by emphasising on their participation and ownership in the developmentprocess.

(a) Sustainable Livelihood

The Company acknowledges skilling and employability enhancement ascrucial factors in developing self-reliance among community youth and women. In line withthis recognition Voltas has adopted it as its flagship programme. Over the period theCompany has ventured into offering both technical as well as non-technical courses. TheCompany upgrades skills of the existing technicians and helps them with certification toboost their confidence and work opportunities. Recognition of Prior Learning is aneffective training initiative that has been undertaken for over three years now. It haspositively impacted work efficiency productivity and income of the existing unskilled aswell as semi-skilled technicians. The Company also aims to share domain expertise withvarious stakeholder groups including trainers from ITIs and other private organisations.The idea is to help the RAC industry with knowledge and expertise that it has developedover six decades of rich experience. Safety is another crucial area that falls within theCompany's CSR initiative periphery. Safety instructions are imparted under allVoltas's training-based programmes.

(b) C ommunity Development

Voltas sees community development as a foundation for improving lives.Under this vertical the Company focusses on priority and fundamental community issuessuch as education health and water. During the year the Company carried out two projectsunder ‘Education Voltas' which: (a) Supports brightest students from themost-marginalised communities in nine districts of Kerala for higher education. It is alsopreparing them for their future careers; (b) Revolves around the operational area ofVoltas in Uttarakhand.

The Company helped in refurbishing Government schools with its focus onwater and sanitation. The project encapsulating quality education in the second phasestarted with firming up the infrastructure to make it a well-equipped place for studying.During COVID-19 Voltas provided safety kits to the students who graduated to become RACtechnicians. Additionally the Company also supported a long-term rehabilitativeintervention for the pandemic-impacted migrant labourers in Uttar Pradesh. The project wasimplemented by the Tata Trust and focused on food security making Government schemesavailable providing livelihood opportunities and policy advocacy. It reached out to2100-gram panchayats 65 blocks and 10 districts of Uttar Pradesh and positivelyimpacted around 400000 beneficiaries directly.

(c) I ssues of National Importance

The three sub-themes under this vertical – Disaster ManagementSanitation and Affirmative Action – for Scheduled Caste and Scheduled Tribecommunities talk about intensity of the country's issues.

Voltas undertook participatory groundwater management at the Beeddistrict of Maharashtra. This initiative was aimed at long-term intervention to addresswater scarcity in the perennially drought-prone area of Beed. Under phase two of theprogramme six needy villages were identified for participatory groundwater management.The programme aimed at improving the lives of people through adoption of integratedapproach for water resource management sustainable agriculture and livelihoodenhancement. This programme therefore aims at reducing the impacts of drought byundertaking various water-conservation and recharging measures with people'sparticipation. The programme is expected to benefit around 13000 people covering 3036families. Of this around 40% families fall under SC / ST / NT categories.

During 2020-21 trainings on crop management included Integrated PestManagement Integrated Nutrient Management and Watershed Management.

497 farmers benefitted from the training and on-field demonstrations.The Company installed water level indicators to sensitise and train the community toimprove water productivity and follow regulatory norms on water usage. Six orientationtrainings on effective operations of Village Water Committee were provided to 171 farmersfrom the project villages. The Village Water Committee acts as an apex body to plan andimplement water and agriculture-related activities in the village and monitor water usage.486 families directly benefitted from the area treatment for water conservation covering632 hectares of land.

Trainings are provided to women Self Help Groups (SHGs) to generateawareness on significance of collective action and effective functioning of SHGs andassessing viable business opportunities. Fifteen such trainings were provided to 484participants. Two training sessions were conducted on goat-rearing and poultry for which59 women participated. Under Affirmative Action Voltas is making an effort to reach outto SC/ST youth through its exclusive programmes. Apart from electrical or plumbingtraining through a skilling centre at Panvel or stitching and tailoring classes atBethany Panvel these programmes aim at supporting the beneficiaries to be gainfullyemployed.

Under National Importance Voltas also initiated an integratedsanitation project in Waghodia near Vadodara in partnership with the Tata Trust. Itmainly had four components: Household Toilets; School Sanitation; Solid Waste Managementand Menstrual Hygiene Management. The project is being implemented in five villages aroundVoltas' Waghodia Plant. The project emphasises on community participation andconvergence with Government programmes and schemes. Despite the pandemic the projectreached out to 3644 community members in 2020-21. This long-term project has bothhardware activities such as HH toilets and soak-pit construction and software activitieslike training and capacity building.

11. Corporate Social Responsibility (CSR)

Disclosure as per Rule 8 of Companies (Corporate Social ResponsibilityPolicy) Rules 2014 in prescribed form is enclosed as Annexure I to the Directors'Report.

During the financial year 2020-21 the Company has spent Rs 11.71crores (2% spend requirement was Rs 11.50 crores) towards various CSR activities in linewith the requirements of Section 135 of the Companies Act 2013 (‘Act'). Detailsof composition of CSR Committee and Meetings held during 2020-21 are disclosed in theCorporate Governance Report.

12. Subsidiary/Joint Ventures/Associate Companies

As on 31 March 2021 the Company has 7 operational subsidiaries 5joint ventures and 2 associate companies. As per the requirements of Section 129(3) of theAct a statement containing salient features of the financial statements of subsidiariesjoint venture and associate companies in prescribed Form No. AOC-1 is attached to thefinancial statements of the Company. Further pursuant to Section 136 of the Act thestand-alone financial statements of the Company consolidated financial statements alongwith relevant documents and separate audited accounts in respect of subsidiaries areavailable on the website of the Company – www.voltas.com The Policy for determiningmaterial subsidiaries of the Company has also been provided on the Company's websiteat https://voltas.com/assets/img/sustainability/ corp_gov/pdf/38085.pdf Performance of keyoperating subsidiary and joint venture companies in India are given below: lUniversal Comfort Products Limited (UCPL) a wholly owned subsidiary of the Companyengaged in the business of manufacturing room air conditioners has been merged into Voltaspursuant to an Order passed by the National Company Law Tribunal (NCLT) Mumbai Bench on11 September 2020. The merger became effective on 26 November 2020 upon filing of theCertified True Copy of the NCLT Order with the Registrar of Companies and UCPL ceased toexist. l Universal MEP Projects & Engineering Services Limited (UMPESL)(formerly known as Rohini Industrial Electricals Limited) a wholly owned subsidiary ofthe Company is engaged in the business of rural electrification work and EPC projectsrelated to solar power. UMPESL has reported turnover of Rs 322 crores and profit beforetax of Rs 18 crores approx. in 2020-21 as compared to

Rs 451 crores and Rs 12 crores approx. respectively in the previousyear. l The performance of Voltbek Home Appliances Private Limited (Voltbek) thejoint venture with Arecelik A.S. for Consumer White Goods was better in terms of salesvolumes as compared to 2019-20. Voltbek commenced manufacturing of Direct Cool (DC)Refrigerators from its Sanand factory in Gujarat. Voltbek has plans to commence in-housemanufacturing of Frost Free (FF) Refrigerators and Top Load Washing machines from Sanandfactory and has targeted to more than double its sales volume in 2021-22. Voltas as one ofthe main shareholders (49%) has provided funds in the form of capital infusion and similarcapital contribution is also made by the foreign JV partner. The paid-up capital ofVoltbek as on 31 March 2021 was Rs 837 crores. During 2020-21 the Company invested Rs 75crores in the share capital of Voltbek and the Company's total investment in Voltbek(49% share) was Rs 410 crores approx.

Except as mentioned above there have been no material changes in thenature of the business of the subsidiaries including associates and joint ventures duringthe financial year 2020-21.

13. Number of Board Meetings

During 2020-21 eleven Board Meetings were held on 14 April 2020; 29May 2020; 19 June 2020; 15 July 2020;

14 August 2020; 7 October 2020; 12 October 2020;

6 November 2020; 20 January 2021; 12 February 2021 and 16 March2021. Most of the Board Meetings were held through Video Conferencing.

14. Policy on Directors' appointment and remuneration includingcriteria for determining qualifications positive attributes independence of a Director

Based on the recommendation of the Nomination and RemunerationCommittee (NRC) the Board has adopted the Remuneration Policy for Directors KMPs andother Employees. NRC has formulated the criteria for determining qualifications positiveattributes and independence of an Independent Director and also the criteria forPerformance Evaluation of individual Directors the Board as a whole and the Committees.The Company's policy on Directors' appointment and remuneration and othermatters provided in Section 178(3) of the Act has been disclosed in the CorporateGovernance Report which is a part of the Annual Report and is also available onhttps://voltas.com/assets/img/sustainability/corp_ gov/pdf/98899.pdf

15. Evaluation of Performance of Board its Committees and of Directors

Pursuant to the provisions of the Act and Regulation 17 of theSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 (Listing Regulations) the Board has carried out an evaluation of itsown performance Committees and performance of individual Directors. The performance ofthe Board as a whole Committees and individual Directors was evaluated by seeking inputsfrom all Directors based on certain parameters as per the Guidance Note on BoardEvaluation issued by SEBI such as: Board structure and composition; Meetings of the Boardin terms of frequency agenda discussions and dissent if any recording of Minutes anddissemination of information; Functions of the Board including governance and complianceevaluation of risks stakeholder value and responsibility Board and Management includingevaluation of performance of the management. The Directors also made their ownself-assessment of certain parameters - Attendance Contribution at Meetings andguidance/support extended to the Management. The feedback received from the Directors wasdiscussed and reviewed by the Independent Directors at their annual separate Meeting heldon 16 March 2021 and also shared with the NRC/Board. At the separate annual Meeting ofIndependent Directors performance of Non-independent directors including Chairman Boardas a whole and various Committees was discussed. The Independent Directors in the saidMeeting also evaluated the quality quantity and timeliness of flow of information betweenthe Management and the Board that is necessary for the Board to effectively and reasonablyperform their duties and expressed their satisfaction in respect thereof.

The performance of the individual Directors performance and role ofthe Board/ Committees was also discussed at the Board Meeting held on 12 May 2021.Performance evaluation of Independent Directors was done by the entire Board excludingthe Independent Director being evaluated.

16. Statutory Auditors

At the 63rd Annual General Meeting (AGM) held on

28 August 2017 the Members had approved the appointment of S R B C& Co. LLP (SRBC) as Statutory Auditors as well as Branch Auditors of the Company toexamine and audit the accounts of the Company for five consecutive financial years between2017-18 and 2021-22. The Auditors' Report for the financial year 2020-21 does notcontain any qualification reservation or adverse remarks except for Key Audit Matters.

17. Cost Auditors

The Company has maintained the accounts and cost records as specifiedby Central Government under Section 148(1) of the Companies Act 2013. The Board hadappointed M/s. Sagar and Associates Cost Accountants as the Cost Auditors for thefinancial year 2020-21 and they have been reappointed as Cost Auditors of the Company forthe financial year 2021-22. Approval of the Members is being sought for ratification oftheir remuneration at the ensuing AGM.

18. Secretarial Auditor

M/s. N. L. Bhatia and Associates the Practicing Company Secretarieswere appointed as Secretarial Auditor to undertake Secretarial Audit of the Company forthe year 2020-21. Their Secretarial Audit Report in prescribed Form No. MR-3 is annexedto the Directors Report as Annexure III and does not contain any qualificationreservation or adverse remarks. M/s. N. L. Bhatia and Associates have been re-appointed asthe Secretarial Auditor for the financial year 2021-22.

19. Audit Committee

The Audit Committee comprise Mr. Zubin Dubash (Chairman) Mr.Debendranath Sarangi and Mr. Arun Kumar Adhikari all Independent Directors in line withthe requirements of Section 177 of the Act. The Board has accepted the recommendationsmade by the Audit Committee from time to time. Details of Audit Committee Meetings heldduring the year 2020-21 have been disclosed in the Corporate Governance Report.

20. Internal Financial Controls

The Internal Financial Controls (IFCs) and its adequacy and operatingeffectiveness is included in the Management Discussion and Analysis which forms part ofthis Report.

The Auditors Report also includes their reporting on IFCs overFinancial Reporting.

21. Risk Management

Pursuant to Section 134(3)(n) of the Act and Regulation 21 of ListingRegulations Risk Management Committee is in place comprising Mr. Zubin Dubash (Chairman)Mr. Debendranath Sarangi and Mr. Arun Kumar Adhikari. The Company has formulated a RiskManagement Policy to establish an effective and integrated framework for the riskmanagement process. During 2020-21 two Meetings were held on 12 November 2020 and 23February 2021 wherein the top 10 risks identified for the Company and various mitigationmeasures in respect thereof were reviewed and discussed.

22. Particulars of Employees

The information required under Section 197 of the Act read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014are given below:

(a) The ratio of the remuneration of each Director to the medianremuneration of the employees of the Company for the financial year:

Directors Ratio to median remuneration
Mr. Noel Tata 0.63
Mr. Vinayak Deshpande 0.42
Mr. Debendranath Sarangi 5.36
Mr. Bahram N. Vakil 5.59
Ms. Anjali Bansal 5.39
Mr. Hemant Bhargava 2.26
Mr. Arun Kumar Adhikari 5.36
Mr. Zubin Dubash 4.18
Mr. Saurabh Agrawal *
(w.e.f. 21 January 2021)
Executive Directors
Mr. Pradeep Bakshi 52.34
Managing Director & CEO
Mr. Anil George *
Deputy Managing Director & CFO (ceased to be Deputy Managing Director upon completion of his term on 31 August 2020 however continued as the CFO)

* Since the remuneration of these Directors is only for part of theyear the ratio of their remuneration to median remuneration is not comparable and hencenot stated.

Note: Ratio of Remuneration of Directors is computed based on Sittingfees and Commission paid during 2020-21. However in line with the internal guidelines nocommission is paid to Mr. Noel Tata Mr. Vinayak Deshpande and Mr. Saurabh Agrawal as theyare in full time employment with another Tata company. They are paid Sitting fees only.

(b) The percentage increase in remuneration of each Director ChiefFinancial Officer Chief Executive Officer Company Secretary or Manager if any in thefinancial year:

Directors Chief Executive Officer Chief Financial Officer and Company Secretary % increase in remuneration in the financial year
Mr. Noel Tata 5.88
Mr. Pradeep Bakshi (14.47)
Mr. Anil George (up to 31-8-2020) *
Mr. Vinayak Deshpande 33.33
Mr. Debendranath Sarangi 36.83
Mr. Bahram N. Vakil 44.76
Ms. Anjali Bansal 68.81
Mr. Hemant Bhargava >100
Mr. Arun Kumar Adhikari 79.92
Mr. Zubin Dubash *
Mr. Saurabh Agrawal (w.e.f. 21 January 2021) *
Mr. V. P. Malhotra (Company Secretary) (18.22)

* Since the remuneration is for part of the year the percentageincrease in their remuneration is not comparable and hence not sated.

(c) Percentage increase in the median remuneration of employees in thefinancial year:

(4.69%)

(d) Number of permanent employees on the rolls of Company:

2617 employees.

(e) Average percentile increase already made in the salaries ofemployees other than the managerial personnel in the last financial year and itscomparison with the percentile increase in the managerial remuneration and justificationthereof and point out if there are any exceptional circumstance for increase in managerialremuneration:

As part of austerity measure due to COVID-19 pandemic there was nosalary increase across all employees of the organisation including the managerialpersonnel. On the contrary senior leadership team took a salary reduction in 2020-21.

(f) Afirmation that the remuneration is as per the Remuneration policyof the Company:

The Company affirms that the remuneration paid is as per theRemuneration policy of the Company. (g) A statement containing names of top tenemployees in terms of remuneration drawn and the particulars of employees as requiredunder 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 aseparate Annexure forming part of this Report. Further the Report and the Accounts arebeing sent to the Members excluding the aforesaid Annexure. In terms of Section 136 of theAct the said Annexure is open for inspection at the Registered Office of the Company. AnyShareholder 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 theCompany.

23. Employee Stock Option

The Company has not issued any Employee Stock Options.

24. Conservation of energy technology absorption foreign exchangeearnings and outgo

Information pursuant to Section 134(3)(m) of the Act relating toconservation of energy technology absorption foreign exchange earnings and outgo isgiven as Annexure II to this Report.

25. Directors and Key Managerial Personnel

In accordance with the provisions of the Act and the Company'sArticles of Association Mr. Noel Tata retires by rotation and being eligible offerhimself for reappointment. Mr. Anil George ceased to be Deputy Managing Director of theCompany upon completion of his term on 31 August 2020. However in view of request madehe continued to serve as the Chief Financial Officer of the Company. The Company hasidentified his successor who is expected to join by June 2021.

On the recommendation of NRC the Board had appointed Mr. SaurabhAgrawal as an Additional Director (Non-Executive Non-Independent) of the Company witheffect from 21 January 2021. In accordance with the provisions of Section 161(1) of theAct Mr. Saurabh Agrawal holds office up to the date of the forthcoming AGM and iseligible for appointment as a Director of the Company. Notice under Section 160 of the Acthas been received from a Member proposing the appointment of Mr. Saurabh Agrawal asDirector of the Company. The Resolution seeking approval of the Members for appointment ofMr. Saurabh Agrawal as a Director including his brief profile forms part of the Notice ofthe 67th AGM of the Company.

The Members had at the 63rd AGM held on

28 August 2017 appointed Mr. Arun Kumar Adhikari as an IndependentDirector of the Company to hold office for five consecutive years from 8 June 2017 up to

7 June 2022. Pursuant to the provisions of the Act and based on therecommendation of NRC the Board recommends the re-appointment of Mr. Arun Kumar Adhikarifor a second term of five consecutive years from 8 June 2022 to 7 June 2027. Theapproval of the Members through a Special Resolution is being sought at this AGM and formspart of the Notice.

Mr. Pradeep Kumar Bakshi Managing Director & CEO of the Companyhas also been appointed as the Managing Director of Universal MEP Projects &Engineering Services Limited for a period of 5 years with effect from 1 April 2021.

None of the other Directors is the Managing or Whole-time Director ofany subsidiary of the Company.

During the year under review the Non-Executive Directors of theCompany had no pecuniary relationship or transactions with the Company other than sittingfees commission and reimbursement of expenses incurred by them (if any) for the purposeof attending Meetings of the Board/Committees of the Company.

Mr. Pradeep Kumar Bakshi (Managing Director & CEO)

Mr. Anil George (Chief Financial Officer) and Mr. V. P. Malhotra (VicePresident-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.

26. Declaration by Independent Directors

Pursuant to Section 149(7) of the Act the Company has receiveddeclarations from all Independent Directors confirming that they meet the criteria ofindependence as specified in Section 149(6) of the Act as amended read with Rules framedthereunder and Regulation 16(1)(b) of Listing Regulations. In terms of Regulation 25(8) ofthe Listing Regulations the Independent Directors have confirmed that they are not awareof any circumstance or situation which exists or may be reasonably anticipated that couldimpair or impact their ability to discharge their duties with an objective independentjudgement and without any external influence and that they are independent of theManagement.

The Independent Directors have complied with the Code for IndependentDirectors prescribed in Schedule IV to the Act and have also confirmed their registrationwith the databank of Independent Directors maintained by the Indian Institute of CorporateAffairs in compliance with the requirements of the Companies (Appointment andQualifications of Directors) Rules 2014.

27. Corporate Governance

Pursuant to Schedule V of Listing Regulations Management Discussionand Analysis Corporate Governance Report and Auditors' Certificate regardingcompliance of conditions of Corporate Governance forms part of the Annual Report. Adeclaration signed by the Managing Director in regard to compliance with the Code ofConduct by the Board Members and Senior Management personnel also forms part of the AnnualReport.

28. Details of establishment of vigil mechanism for Directors andemployees

The Company had adopted a Whistle Blower Policy ("thePolicy") as required under Section 177(9) of the Act and Listing Regulations. ThePolicy provides a mechanism for Directors and employees of the Company to approach theEthics Counsellor/Chairman of the Audit Committee of the Company in case of any concern.The Whistle Blower Policy can be accessed on the Company's website at the link:https://www.voltas.com/assets/img/sustainability/ corp_gov/pdf/43085.pdf

29. Particulars of loans guarantees or investments under Section 186of the Act during 2020-21

Particulars of loans given investments made guarantees given andsecurities provided along with the purpose for which the loan or guarantee or security isproposed to be utilised by the recipient are provided in the standalone financialstatements (Please Refer to Notes 8918 and 44 of the standalone financial statements).

30. Particulars of contracts or arrangements with related parties

During the year under review the Company did not have any contracts orarrangements with related parties in terms of Section 188(1) of the Act except for theproposed transfer of domestic B2B businesses to UMPESL and execution of BTA to thateffect. However as the transaction is not yet consummated the details of such contractsor arrangements in Form AOC-2 does not form part of the Report as the same is notapplicable for the year under review.

31. Secretarial Standards

The Company has complied with the provisions of Secretarial Standardson Meetings of the Board of Directors (SS-1) and on General Meetings (SS-2).

32. Directors' Responsibility Statement

Based on the framework and testing of internal financial controls andcompliance systems established and maintained by the Company work performed by theinternal statutory cost and secretarial auditors including audit of internal financialcontrols over financial reporting by the Statutory Auditors and the reviews performed byManagement and the relevant Board Committees including the Audit Committee the Board isof the opinion that the Company's internal financial controls were adequate andeffective during the financial year 2020-21. Accordingly pursuant to Section 134(5) ofthe Act the Board of Directors based on the assurance given of the business operationsto the best of their knowledge and ability confirm that: (i) in the preparation of theannual accounts the applicable accounting standards have been followed and that there areno material departures; (ii) they have in the selection of the accounting policiesconsulted the Statutory Auditors and have applied their recommendations consistently andmade judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of financial year and of theprofit of the Company for that period;

(iii) they have taken proper and sufficient care to the best of theirknowledge and ability for the maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities; (iv) they have prepared theannual accounts on a going concern basis; (v) they have laid down internal financialcontrols to be followed by the Company and that such internal financial controls wereadequate and operating effectively; and (vi) they have devised proper system to ensurecompliance with the provisions of all applicable laws and that such systems were adequateand operating effectively.

33. Annual Return

Pursuant to Sections 92(3) and 134(3)(a) of the Act the Annual Return(Form MGT-7) is available on the Company's website at the link:https://www.voltas.com/ assets/financial_pdf/annoucements/31527.pdf

34. Disclosure as per the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013

The Company has zero tolerance for sexual harassment at workplace andhas adopted a ‘Respect for Gender' Policy on prevention prohibition andredressal of sexual harassment in line with the provisions of the Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013 (‘POSHAct') and the Rules there under. As per the requirement of POSH Act the Company hasformed an Internal Committee to address complaints pertaining to sexual harassment at workplace. During 2020-21 one pending complaint of 2019-20 was resolved and settled amicably.The Company did not receive any new complaints in 2020-21.

35. General

The Notes forming part of the Accounts are self-explanatory or to theextent necessary have been dealt with in the preceding paragraphs of the Report.

On behalf of the Board of Directors
Date: 12 May 2021 Noel Tata
Place: Mumbai Chairman

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