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Voltas net down by 57%

May 31, 2000

Voltas Limited net profit for the year slumped by 57% due to the decline in sales by 16% from Rs 9,843 m in FY99 to Rs 8,243 m in FY00. The decline in sales is due to the divestment of its chemicals and part of the white goods business. The companies operating margins improved marginally from 2.8% to 3.3%.

(Rs m) FY99 FY00 Change
Sales 9,843 8,243 -16.3%
Other Income 145 167 14.8%
Expenditure 9,572 7,975 -16.7%
Operating Profit (EBDIT) 271 268 -1.2%
Operating Profit Margin (%) 2.8% 3.3%  
Interest 331 215 -34.9%
Depreciation 205 150 -26.6%
Profit before Tax (119) 69  
Other Adjustments* 260 (9)  
Tax 13 5 -65.4%
Profit after Tax/(Loss) 128 55 -57.1%
Net profit margin (%) 1.3% 0.7%  
Earnings per share 3.9 1.7  

The other adjustments includes the voluntary retirement scheme (Rs 110 m spread over three years), net loss on sale of long-term investments and diminution in the value of investments. The company has repaid its debenture amounting to Rs 470 m thus bringing down the interest burden.

Voltas Limited has 27% market share in airconditioners market and a 20% in refrigerators segment. It is also manufacturers washing machines, chemicals and granites. The company has been severely affected by the non-core business activities and labour union problem for quite some time. But, the company has been restructuring for the past two years thus bringing down the expenses by 17% from Rs 9,572 m to Rs 7,975 m.

The stock is currently trading at Rs 34 at a P/E multiple of 20.1x on the FY00 earnings.

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