Voltas has a 10x10x10 vision

MUMBAI: Voltas, the Rs 2,000 crore air conditioning and engineering services company, has appointed an international consultancy to restructure its business and define a roadmap to achieve a Rs 10,000-crore top line by 2010, chief financial officer M M Miyajiwala said on Saturday.

Voltas has a 10 X 10 X 10 vision statement, under which it hopes to become a Rs-10,000 crore company by 2010, and take profit margins to 10%.

Its current margins are rather low at about 3.5% at net level and 6.5% at the operating level.

Miyajiwala was addressing an investors meet organised by research house equitymaster.com.

Voltas, largely known for room air conditioning and water dispensers, has three business units - electro mechanical projects and services (air conditioning solutions for the institutional segment viz. hotels, malls, hospitals etc.), engineering products and services (marketing machines for the textile, mining and construction, material handing businesses) and unitary cooling products (air conditions for household). While the electro mechanical projects division contributes 55% to the top line as well as bottomline, the engineering products and services contributes only 7-8% to revenues but 25% to net profit.

The consultants would also consider the possibility of demerger of the more profitable electro mechanical division, Miyajiwala said.

He said, to achieve the top line growth of five times in as many years, the company would actively consider the inorganic growth route.

Water management is an area the company is clearly excited about. “Water management, which includes sewage treatment and purification, is a big business and it can become bigger or as big as the oil industry,” said Miyajiwala.

The company has won a major contract from the Singapore government in setting up a water treatment facility in the city state.

The company is aiming to increase margins by cutting costs. It has closed it Hyderabad unit and shifted production to Pantnagar in Uttaranchal where labour costs are one tenth, power costs are two third, and there is excise and income tax exemption.