Voltas held a conference call to discuss quarterly and nine months ended results and future plans. Miyajiwala, Executive Vice President Finance & CFO and Garudachar, GM Corporate Communication and Investor Relation addressed the meet
Highlights of the call
- The Order Book of the Segment A (Elector-Mechanical projects and services) stands at Rs. 5333 Crores which though slightly lower compared to the position as on end September 2008 is 52% higher compared to the order book as per end December 2007 of Rs. 3505 Crores.
- In the Domestic Projects Business, the Order Book stands at Rs. 1083 Crores which is an increase of 35% over the same period of last year. In the International Business, the order book stands at Rs. 4250 Crores which is an increase of 58% over the position same time last year. Domestic Order book would cover a period of around 12 months and International order book would cover about 30 months.
- The company plans to review the target of 10*10*10 goal i.e. Rs 10000 crore of revenue by 2010-11 with 10% PBT margin. The final view on the same would be taken by Mar’09. Management expects that the target would be delayed by a year or two.
- EVA is still positive at a reasonable 19% against 26% achieved last year due to increase in WACC
- Turnover per Rupee of employee cost, in the domestic market is slightly lower at Rs 13 against Rs 15 in the same quarter last year but remains at Rs 5 for International business. This ratio is likely to improve going forward.
- Debt to Equity Ratio has gone up slightly to 0.15:1 against the previous year’s 0.09:1. However, we expect this to bounce back going forward.
- Despite some increases in capital employed due to the market conditions, the Return on Capital employed remains high at about 24%.
- EBITDA margin has dropped from about 10% to 7% due to the pressures in Engineering and UPBG Businesses and due to the additional costs as discussed below.
- Taxation as a percentage of PBT has dropped marginally from 31% to 29% due to the composition of revenues.
- During the quarter, performance of Rohini Industrial Electrical (RIE) has been satisfactory and in line with the projections.
- Net worth of the Company stands at Rs 728 Crores and the borrowings are at Rs 104 Crores. The borrowings are almost nil in the domestic market but are much higher in the international market mainly due to the non collection of some of the advances and the other reasons mentioned above. These are likely to come down in the fourth quarter.
- Investment of surplus funds in liquid investments in India is at the level of Rs. 30 Crores. The Company continues to maintain substantial Bank balances in the International business arising from advances on new projects totaling about Rs. 300 Crores.
- Inventories have been higher in Domestic businesses, primarily in the Mining and Construction Equipments and Unitary Cooling Products businesses. The sudden slowing down of off take of such equipment is putting pressures on capital engagement and in particular on inventories. Other increases in inventories relate to jobs in progress
- Numbers of days receivables in the Domestic Businesses have risen, however, these are not at levels, which may be a matter of concern. The receivables in Domestic Projects Business have risen to about 90 days. Strict credit control is being maintained.
- The company has approved a proposal for transfer of Chemicals Trading business, as a going concern, to DKSH India Pvt., a wholly owned subsidiary of DKSH Holding, Zurich for a lump sum consideration of Rs 20 crores. This amount would be realized in Q4 FY’09.