Feeling the chill

Concerns over order-book flows and margin pressure across verticals continue to plague Voltas

I think we’re getting used to winning!,” proclaimed an elated Shaukat Ali Mir, executive vice-president and COO of Voltas, on bagging the MEP Contractor of the Year, 2011, award in Dubai for the iconic new Etihad Towers in Abu Dhabi. It was the second consecutive win for the Tata group company; it had bagged the title in 2010, as well, for the Ferrari World project. Voltas seems to have found its El Dorado in West Asia; it has a string of landmark projects in the region to its credit, including the Burj Khalifa at Dubai, the F1 track and Ferrari World at Abu Dhabi, Wafi Hotel and Mall, a pyramid-shaped 240-room hotel in Dubai, Mall of the Emirates and the Etihad Towers. 

But look at the company’s performance in the markets and you realise that the recent awards and accomplishments are more like a mirage. After a painful 67% drubbing on the bourse last year, the stock’s dismal streak has continued well into the New Year; after the Q3 results in early February, it tanked 33% to the current level of ₹108. So, what’s happening at Voltas? To understand that, you need to know what constitutes Voltas’ operations and what is giving the market the goose bumps.  

West Asia blues

To begin with, Voltas’ business is spread across three verticals. Electro-mechanical projects and services (MEP), which primarily comprises heating, ventilation and air conditioning (HVAC) solutions for large enterprises, accounts for 70% of the company’s revenues. Unitary cooling products (UPC), which consists of air conditioners (ACs) and commercial refrigeration solutions, and the engineering products and services division, comprising textile machinery, mining and construction equipment and materials handling equipment, account for the balance.

In India, only 20% of contracting market is currently integrated in MEP format compared with over 75% in developed countries. So, Voltas has consciously pursued its strategy of growth in West Asia, a region which is looking to ramp up it


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