Cool Comfort

Voltas is an air conditioning and engineering services provider. Its businesses can be segregated into three segments: electro-mechanical projects and services (accounts for 61 per cent revenue), engineering products and services (10 per cent revenue), and unitary cooling products for comfort and commercial use (29 per cent revenue). The company is controlled by the Tata Group which owns 30.61 per cent stake in it through Tata Sons and Tata Investment Corporation. Industry overview The two key industries that hold sway over the company’s prospects are mechanical, electrical and plumbing (MEP), which the electro-mechanical projects and services segment caters to, and the air conditioning industry. The MEP segment’s outlook does not look bright in the coming one-two quarters. In India this industry is going through a subdued phase due to a glut in the supply of commercial realty projects. In the near term, visibility of fresh orders appears to be muted, with only a few top IT companies looking to set up new facilities. Internationally as well, especially in the Middle East, increased competition is undercutting the margins of existing players. The air conditioning segment, on the other hand, is in a rapid growth phase. In 2010-11, the industry saw volume growth in excess of 20 per cent. Moreover, the air conditioning industry has a diverse user base comprising both commercial and retail customers. Hence, a slowdown in one industry gets offset by an uptr

This article was originally published on June 24, 2011.