SYNOPSIS

ON

FINANCIAL AND COMPARATIVE

ANALYSIS OF VOLTAS LTD.

Under the supervision of Submitted by

Mr. Rajinder Sachin
Lect. Roll No. : 15061119129
ZAD Computer
Rohtak
Remarks of Evaluator
Approved/Disapproved Approved/Disapproved
(I Evolution) (II Evolution)

DIRECTORATE OF DISTANCE EDUCATION

GURU JHAMBHESHWAR UNIVERSITY OF SCIENCE &
TECHNOLOGY
HISSAR-125001 (HARYANA)
 DIRECTORATE OF DISTANCE EDUCATION
GURU JHAMBHESHWAR UNIVERSITY OF SCIENCE &
TECHNOLOGY
HISSAR-125001 (HARYANA)

Name : Mr. Rajinder

Designation : Lecturer
Qualification : MBA
Experience : 5 years
Official Address : ZAD Computers, Rohtak
Mobile : 9729077884
E-Mail : infozadglobal@[Link]

I am willing to supervise Sachin

Enrolment No. : 15061119129
On the topic : Financial & Comparative Analysis

Signature

Countersigned by the employer with seal

Countersigned by Director of Study Centre with Seal

 CERTIFICATE

This is to certify that Sachin Enrolment No. 15061119129 has proceed under
by supervision her Research Project Report on Financial & Comparative
Analysis in the specialization areas Finance.
The work embodied in this report is original and is of the standard expected of
an MBA student has not been submitted in part or full to this or any other
university for the award of any degree of diploma. He has completed all
requirements of guidelines for Research Report and work is fit for evaluation.

Signature of Supervision/ guide

Name : Mr. Rajender

Designation : Lecturer

Official Address : ZAD Computers, Rohtak

Forward by Head/Director/Study Center

(With Signature Name & Seal
 DECLARATION

I SACHIN ROLL 15061119129 NO. MBA of the GJU, ROHTAK hereby

declares that the project entitled Financial & Comparative Analysis is an original

work and the same has not been submitted to any other institute for the award of any

other degree. The interim report was present to the Supervisor on the feasible

suggestions have been duly incorporated in consultation with the Supervisor.

Signature of the Candidate

 ACKNOWLEDGEMENT

No task is single mans effort. Any job in this world however trivial or tough cannot
be accomplished without the assistance of others.
I wish to record my gratitude to all the persons with whom I interacted and have
contributed significantly for the completion of the project. It is very difficult to put
their names individually but their contribution cannot be underestimated without their
help and co-ordination, this project would not have been possible.

I take this opportunity to extend my heartiest thanks to Mr. RAJINDER KUMAR

for providing me an opportunity to undergo training in their esteemed organization.

Besides, all the official and staff deserve my heartiest thanks for providing co-cordial
atmosphere and made me feel like home.
 PREFACE

MBA is stepping stone to management career .In order to achieve practical,

positive and concrete results the classroom learning need to be effectively needed to
the realities of the situation existing outsides the classroom. This is particularly true of
Management.

To develop healthy managerial and administration skill in potential managers,

it is necessary that theoretical knowledge must be supplemented with exposure to the
real environment. Actually, it is life for a management itself is realized. It removes
hesitation.

The objective of the research is to make the student to go into the deep of a
particular situation and to realize how difficult the scenario is. It gives the practical
understanding to the researcher about such situation. Research is always very
important in every field.

(SACHIN)
 ACKNOWLEDGEMENT

It was great experience of undergoing my 6 weeks training at multinational company like

VOLTAS LTD., A TATA ENTERPRISE. I got a chance to learn and experience ethos

and environment of multinational company.

I wish to express my deep sense of gratitude to my reverend guide Mr. ANUJ

MANGLA who through his benevolent guidance has enabled me to accomplish my

project. He has been great source of inspiration to me, all the way. Without his keen

interest, incessant encouragement and invaluable suggestions this report could not

have attained its present shape with zeal and enthusiasm.

I would like to extend my thanks to the entire staff members who have been very

helpful throughout my training in supplying with all the necessary information.

I would express my thanks to VOLTAS LTD., for accepting me as a summer

trainee in such an esteemed organization and special thanks to N C COLLEGE OF

ENGINEERING.

Special thanks to:

Mr. [Link]

Senior Vice President

 (NIPUN WADHAWAN)

INDEX

S NO. TOPIC

1. EXECUTIVE SUMMARY

2. INTRODUCTION OF COMPANY

3. INTRODUCTION OF STUDY

4. STATEMENT OF OBJECTIVES

5. RESEARCH METHODOLOGY

6. ANALYSIS & INTERPRETATION

7. CONCLUSION & FINDING

8. SUGGESTIONS

9. LIMITATIONS

10. ANNEXURE

11. BIBLIOGRAPHY
 INTRODUCTION ABOUT COMPANY

A member of Tata Enterprises, we are in the business of manufacturing,

marketing and servicing engineering products with a strong focus on Air-

conditioning & Refrigeration and Engineering Products & Projects. We also

have a presence in Chemicals Trading, which is developing rapidly. We will

build and sustain a leadership position in these areas and will align our

investments and costs to the skills we have in these businesses.

Our relations with customers, principals, collaborators, dealers, suppliers,

financial institutions and colleagues will be governed by a sense of integrity

under which we provide and receive value for money, to recognizable and

measurable standards.

Our management is professional and transparent, increasingly backed by

technologies and systems that provide free and constant access to

information and knowledge.

We strive to remain innovative by attracting, retaining and developing people

who constantly keep the customer in mind, and who combine empowerment

and freedom to act with accountability. We encourage people to develop

themselves fully as members of a wider community.

We recognize the role of technology in creating a better quality of life for those

around us and in helping our nation to grow. To this end, we will commit

resources to ensure that we achieve our goal of providing best-in-class

products, services and customer support.

We value our shareholders as long-term investors and will strive to increase

shareholder value and increase returns through sound financial practices and

the optimum use of corporate assets.

We assume responsibility for the environment in which we function, and strive

to better it with our products and services. We regard ourselves as

responsible corporate citizens, and remain committed to serving the

community.
 HISTORY OF THE COMPANY
History:

In the year 1951 a collaboration with the Volkart Brothers, a Swiss firm and

Tata Sons Limited, resulted in the formation of Voltas Limited, which is now

one of the leading Air-conditioning & Engineering concerns of India.

Throughout the years Voltas has a list of innovative firsts in India:

Manufactured the first ever room air conditioner in 1954

Set up the first integrated plan in 1969

Introduced the first innovative split air conditioner in 1984

Introduced the tall and elegant slim line air conditioner in 1993

Introduced microprocessor based packaged unit in 1998

First to introduce water dispensers with mini fridge

Launched the 55 litre refrigerator for kids

Among the first to launch sub 1.0 Ton ACs

 COMPANY PROFILE

India's premier air conditioning and engineering

services provider

Voltas Limited offers engineering solutions for a wide spectrum of industries in

areas such as heating, ventilation and air conditioning, refrigeration, electro-

mechanical projects, textile machinery, machine tools, mining and

construction equipment, materials handling, water management, building

management systems, indoor air quality and chemicals.

The Company's strengths lie principally in

the design and manufacture of industrial equipment

management and execution of air conditioning and public works

projects

sourcing, installation and servicing of technology-based systems

representation of global technology leaders, serving diverse industrial

sectors and applications.

Operations

Voltas' operations have been organized into four independent business-

specific clusters. Each of these has its own facilities for market coverage and

service to customers.

1. Electro-Mechanical Projects & Services

Air Conditioning & Refrigeration

Electrical, Mechanical & HVAC Solutions (International)

Water Management & Treatment

2. Engineering Agency & Services

Textile Machinery

Mining & Construction Equipment

Machine Tools

Materials Handling Solutions

3. Unitary Cooling Products for Comfort & Commercial Use

Cooling Appliances

Commercial Refrigeration

4. Others

Chemicals Trading
Manufacturing

Voltas possesses total capability in the manufacture of room/split air

conditioners, industrial air conditioning and refrigeration equipment, water

coolers, commercial refrigerators, visicoolers, freezers and forklift trucks. All

these products bear the stamp of state-of-the-art automated manufacturing

plants resulting in consistently high quality and reduced costs.

Furthermore, the Company is partnered with Fedders International Inc. of

USA for 'manufacture only' alliances producing low cost, high quality room air

conditioners.

Projects

Over the years, Voltas has built up a substantial reputation and is actively

engaged in turnkey projects in fields such as electro-mechanical works

comprising electrical building services, HVAC, plumbing, public Health, fire

fighting, ELV & specialized systems; electrical power projects; environmental

and water pollution control; pumping stations and water supply; water & waste

water treatment projects. The Company has ISO 9001 - 2000 standards

certification in this business, and has successfully undertaken and executed

project works in the Middle East, Far East and South East Asia, CIS countries

and Africa.
Marketing

Voltas' sourcing and marketing operations cover air conditioners, textile

machinery, machine tools, mining and construction equipment and industrial

chemicals. In these sectors, the company demonstrates its specialized

engineering expertise, as well as its extensive network for global sourcing.

Awards

United Nations' Grand Award for Excellence in Public Service

Worldwide, 1993-94.

International Public Relations Associations' Golden Trophy for

Excellence in Customer Service, 1994-95.

Mumbai Chamber of Commerce and Industry's Good Corporate

Citizenship Award, 1995-96.

Technological leadership

As a leader in technology, Voltas has made consistent efforts to bring

customers the latest and best technologies across varied domains. The

Company has entered into collaborations and technical tie-ups with world

leaders so as to keep pace with global developments. Some of Voltas'

collaborations are with:

Hitachi Limited, Japan, for vapour absorption machines

Standard Refrigeration Company (USA), for direct expansion chillers

Dunham-Bush Incorporated (USA), for screw chillers

Siemens Building Technologies (Asia-Pacific), for building management

systems

Ruks Engineering, Canada, for ozone engineered systems

Costan of Italy, for Refrigerated Cabinet Display Units for hypermarket

engineered systems.

Representations
The company is also an Indian representative of a number of leading

manufacturers worldwide. To name a few:

Aqualon, USA

Hercules, USA

Huntsman Tioxide, UK

LeTourneau Inc., Australia

Terex Unit Rig, USA

Terex - O&K, Germany

Terrot Strickmaschinen, Germany

Mitsubishi Heavy Industries, Japan

Fanuc Ltd., Japan

Dressta, Europe / USA

SIP, Switzerland

Hyundai, Korea

Terex - BL-Pegson, UK

Terex - Powerscreen, UK

LMW, India

Heliot International, France

HTT, Switzerland

Nation-wide facility network

The Company has its head office in Mumbai; zonal headquarters in Mumbai,

Kolkata, New Delhi and Chennai; territorial offices at Ahmedabad, Bangalore,

Chandigarh, Hyderabad, Jamshedpur, Lucknow, Pune and Kochi; Overseas

offices in Dubai, Abu Dhabi (UAE), Hong Kong, Singapore and Qatar; and

factories at Thane (Maharashtra) and Dadra (Union Territory).

Community Development and Environmental

Protection

The Company has consciously laid emphasis on corporate social

responsibility and on ecological and environmental protection. Exemplary

corporate citizenship is demonstrated in numerous social upliftment projects,

whether independently undertaken or in support of the Tata Council for

Community Initiatives.

Subsidiaries

Metrovol FZE

VIL Overseas Enterprises B.V.

Voice Antilles N.V.

Simto Investment Company Limited

Auto Aircon (India) Limited

Simtools Ltd

Joint Ventures

Universal Comfort Products Private Limited, Dadra, India

 Universal Voltas Air-conditioning & Refrigeration Co., Abu Dhabi, UAE

Saudi Ensas Company Ltd., Jeddah, Saudi Arabia

Lalbuksh Voltas Engineering Services & Trading Company LLC, Ruwi,

Sultanate of Oman

Weathermaker Limited, Jebel Ali, Dubai

 AREAS OF BUSINESS

OPERATIONS

MANAGEMENT
 Board of Directors

Chairman Ishaat Hussain

Managing Director A Soni

Directors N M Munjee
N J Jhaveri
S D Kulkarni
Ravi Kant
N D Khurody
N N Tata

Corporate Management
Managing Director A Soni

Executive Vice Presidents M M Miyajiwala

A K Joshi
P N Dhume
S Johri
S Venkatraman

Vice Presidents A J Gole

S Bilgi
 Electro-Mechanical Projects & Services

M Gopikrishna
A K Joshi Vice President
(Operations)
Air Conditioning & Executive Vice
Refrigeration President & Chief R Amaranth
Operating Officer Sr General Manager -
Packaged & VRF Systems

Electrical, Mechanical V M Joshi

& HVAC Solutions Vice President
P N Dhume
(International)
Executive Vice President
& Chief Operating Officer
Water Management & R P Mahajan
Treatment Vice President

Engineering Agency & Services

Textile Machinery Sudhir Sharma
Vice President
S Venkataraman (Marketing)
Executive Vice President &
Machine Tools Chief Operating Officer
Philip Mascarenhas
General Manager

Mining & Sanjay Johri

Milind Shahane
Construction Executive Vice President
Vice President
Equipment & Chief Operating Officer

Milind Shahane
Vice President
Sanjay Johri
Materials Handling
Executive Vice President
Solutions R V Raghavan
& Chief Operating Officer
General Manager
(Operations)
 Unitary Cooling Products

Cooling Appliances K J Jawa

Senior Vice President

Sanjay Johri
Executive Vice President K J Jawa
Commercial & Chief Operating Officer Senior Vice President
Refrigeration
C J Jassawala
Vice President

Others
P N Dhume
Executive Vice President &D Roy
Chemicals Trading
General Manager
Chief Operating Officer

Service Departmental Heads

Finance and Commercial M M Miyajiwala
Executive Vice President &
Chief Financial Officer

Human Resources A J Gole

Vice President

Information Technology Satish Bilgi

Vice President

Property Development Cell R P Mahajan

Vice President

Corporate Communications B N Garudachar

General Manager

Company Secretariat V P Malhotra

General Manager
VOLTAS IS PIONEER IN COOLING SERVICES IN INDIA
Voltas is the pioneer in cooling appliances in India. In fact, the Voltas name is

often synonymous with air conditioners. Over the past four decades, over a

million customers have put their trust and confidence in the Voltas range of air

conditioners, a feat unmatched in Indian markets.

Few in this field can match Voltas' range of breakthroughs and firsts:

In 1954, Voltas manufactured India's first indigenous room air conditioners.

In 1969, Voltas set up India's first integrated AC plant

In 1982, Voltas introduced innovative split air conditioners.

In 1987, Voltas pioneered a mini water cooler, catering to offices, small shops

and small scale units

In 1993, Voltas introduced the tall elegant Slim line

In 1998, Voltas introduced the first microprocessor-based package units

In 2002, Voltas launched India's first sub-Rs 10,000 room AC

The company is constantly extending its range, sharpening its

professionalism, and intensifying the personal touch - resulting in strong

consumer loyalty for its products.

A range of window, split and Sensicool air conditioners is manufactured for the

institutional and retail segments. The range includes Vectra, the economy

problem, and Vertis DX, the premium brand, positioned as 'AC with IQ', the

value-for-money

Bestselling model, offering international quality at a very affordable price. All

these are manufactured in a joint venture between Voltas and Fedders

International of US.

Voltas also markets a range of commercial refrigerators under the 'Coldcel'

brand name, as well the 'Quench' range of water coolers and dispensers.

For all its ranges, Voltas has a service package that supports them. It offers a

lifeline service through its nationwide network of service centers. Well-trained

engineers, technicians and a fully computerized network response system

support each other. Additionally, Voltas enjoys the whole-hearted support of a

270-strong dealer base and 700 retailers, whose goodwill and trust have been

earned over four decades.

VOLTAS IN INDIA

Leader in air conditioning projects

 Largest projects exporter in Mechanical, Electrical and Public Health
works

No. 2 brand in air conditioners

Most trusted name in mining and construction equipment

Leader in textile machinery

Premier Player in machine tools

Leader in forklift trucks

ANNOUNCEMENTS
VOLTAS - PRESS RELEASEVoltas Ltd has announced its multi-pronged

strategy to attain market-share of 20 percent of the 12.5 lakhs domestic air

conditioner units market. With pioneering laurels in the category and breaking

the sub 10K price points WACs in 2004, the Company now envisions to bridge

the gap between shining Indians and "Aam Aadmi" with the launch of a new

range of WAC & Split ACs. With 16 percent market share currently, the

Company is aggressively strategizing grab 20 percent market share during FY

06-07, paving its way to becoming the leading Indian Company in the air-

conditioning space.

Strengthing its association with Air Conditioning & Refrigeration, the Company

is on mission to transform the way air conditioners are marketed and enjoyed

in our country. The Company unveiled their new marketing campaign for 2006

- "India Ka Dil, India Ka AC" nationally. In addition, the company will also be

introducing its new range of products that will be introduced during the

calendar year 2006.

This year unveiling an aggressive multi-pronged strategy, the Company will be

targeting Sec B & C with the launch of the new range of Vertis Premium

WAGS and Vertis Gold for Sec A & Last year, for the first time the Company
introduced a range of air-conditioners below Rupees 10,000/- which were

affordable and accessible for the larger section of Indian households.

Exhilarated on the aggressive multi-pronged strategy for 2006. Mr. K J Jawa,

Senior Vice President Unitary Products Business Group (UPBG), of the

Company said. "We have earmarked an amount of Rs 200 million as

marketing expenses in addition to Rs 60 million for the Retail Expansion. Over

and above the advertising spends and other below the line activities, we

would be looking at adding 1500 Dealers making it a total of 3500 nationally

apart from strengthening our franchisee spread from 350 to 500 this year."

"Voltas is all set to target the leadership role by introducing India Ka AC" - the

new range of AC which will be supported by aggressive marketing strategies.

The strategy for these markets is stiff evolving and the current priority is to

ensure placement of the product in these markets. The present efforts in the

markets are to reach out to the masses - 'Aam Aadmi', identify Supply-

demand gaps and provide products to fill them. It is our constant endeavor to

meet the growing demand for cost-effective, high-performance yet simplistic

Cooling solutions for our most valued customers, Mr. Jawa further added.

VOLTAS - PURCHASE OF SHARES OF WEATHERMAKER, UAE, JV

COMPANY

Voltas Ltd has informed BSE that Weathermaker Ltd (WML), a limited liability

Company, registered in the Isle of Man, is engaged in the business of

manufacturing galvanized iron, aluminum, black mild steel and stainless steel

duct and has its manufacturing facility in Jebel Ali Free Zone, UAE. The

Company along with its foreign wholly owned subsidiary in UAE held 49% of

the paid-up capital of USD 408441 of WML comprising 408441 shares of USD

1 each (Voltas 24% and 25% by Company's wholly owned subsidiary). The

balance 51% of the capital of WML was held by 7 different individuals,

including local UAE national.

The Company had made an offer for purchase of 76% shareholding (310415

shares) in WML to all other shareholders, including its wholly owned

subsidiary, which has since been accepted. The total cost of investment is Rs

27.40 million approx. Based on documents / transfer deeds received, the

Company has paid the consideration amount to the respective shareholders

and the transfer / registration of shares in the name of the Company has been

completed by the Companies Registry at Isle of Man on March 25, 2006 in

respect of 157250 shares of WML. Accordingly, the Company's present

shareholding in WML stands increased to 62.5% of the total paid-up capital of

USD 408441 of WML.

VOLTAS BOARD RECOMMENDS DIVIDEND & STOCK SPLIT

Voltas Ltd has informed BSE that the Board of Directors of the Company at its

meeting held on May 11, 2006, inter alias, has recommended dividend of 60%

on equity shares of Rs 10/- each for the year 2005-2006. The Directors has
also recommended split of shares of face value of Rs 10/- each into shares of

face value of Re 1/- each, subject to requisite approvals in respect thereof.

RECENT NEWS
Voltas to organize show on July 7
Tribune News Service

Chandigarh, June 11

Voltas expects a thirty per cent increase in the demand for its. ACs.

The company, which holds around 4 per cent share in the retail market for

ACs and nearly 20 per cent in the organized institutional sector, will now focus
on the retail segment, said Mr. K J Java, Regional Vice- President, while

talking to newspersons here today.

Mr. Java was here in connection with the road shows being organized in

Chandigarh, Panchkula and Mohali to create awareness about its new range

of Vectra and Verdant air conditioners based on green air technology.

Members the Voltas team can be seen at entertainment joints, petrol pumps

and several other places informing the people about the new products and

providing them with discount booklets etc.

These shows will culminate into Voltas Nexgen show, which will be organised

on July 7.

Voltas recently has entered into a joint venture with Fedders for the

manufacture of ACs. The JV, say the company officials, will help the company

to market excellent modern cooling appliances and increase its market share.

"To meet the competition, w e are also trying to cut down on costs further ",

said Mr. Java." Excise duty reductions", he said, "and economies would help

the company reduce the production costs and thus retain it share despite

increased competition".
In addition, Voltas is also focusing on providing more value-added services to

its customers in terms of increased warranty, after sales services etc.

HOW VOLTAS TURNED SUCCESFULLY

MR. K J JAVA (SENIOR VICE PRESIDENT)

In the past month, senior executives at Voltas' air-conditioning division have

been busy traveling between major Indian cities, unveiling new products for

the season and announcing the company's strategy to tap SEC B and C

markets with a range of competitively priced products.

Voltas is already among the top three air-conditioner brands in the country,

but that is not nearly enough. The Tata Group Company wants an even bigger

piece of the pie than it has, and it wants its share of the growing action in the

Indian AC market (which is clocking growth of more than 20 per cent a year).

The mood in Voltas today is aggressive - a welcome change from even a few

years ago, when the company was being looked upon as a white elephant in

a market that had been taken over by multinational brands such as LG,

Samsung and Carrier.

The company had suffered significant losses and its market share dropped

from a high of 30-40 per cent in the early 1990s to around 7 per cent in 2000-

01. From being the No.1 player in the Indian AC market in 1992-93, Voltas

was down to an also-ran No. 6. The wake-up call came as a directive from the

Tata leadership - perform or perish.

Well, Voltas has clearly performed. The strategist looks at how the AC division

restructured itself and returned to a leadership position.

Fall from top

For close to five decades (from its inception in 1954 to 1992), Voltas ruled the

Indian AC market with close to 40 per cent market share. Of course, life was

simpler back then - there was no multinational onslaught and the branded

players in the market could be counted on the fingers of one hand: Voltas,

Blue Star, Fedders Llyod and Arco. The unorganised small-scale industry was

strong, tapping more than half the market.

Says Raman Mangalorkar, head, consumer and retail, at management

consultancy AT Kearney: "The MNC brands changed the rules of the game.

The LGs and Samsungs came at a time when consumers were yearning for

technologically superior and smarter products. They raised the quality levels,

came with a plethora of choice options, and were able to drive demand."

Voltas was not prepared for the changing market dynamics. Before the entry

of the MNCs, the AC market was primarily driven by sales in the institutional

market (government and corporations) - the residential or retail AC market

was minuscule. Even after the entry of the new players, Voltas's share in the

retail segment hovered around 5 per cent.

Says K J Java, senior vice-president, Unitary Products Business Group,

Voltas Ltd, "We made the mistake of not taking the retail AC market seriously.

The MNCs had opened up this market and made deeper inroads. They were

buying more shelf space, which Voltas never had."

That's when the Tata leadership came up with a directive to Voltas to either

reclaim its position among the top three players, or exit the AC business

altogether.

Do or die

Based on the recommendations of the Tata Strategic Management Group (the

management consultancy that is part of the Tata Group), Voltas began an

internal regeneration drive. A detailed study was made on how the market

would shape up, the competitors, their offerings, strategies, and the market

spread - in short, everything related to the Indian AC market. The

recommended solution: transform Voltas from engineering to a marketing

company.

To effect that transformation, Voltas planned a Big Bang strategy that spelled

out ways to revive every facet of the company - product, channel, systems,

service, costs and brand. While in the good old days, Voltas had earned

profits keeping its margins high, the MNCs had changed the rules.

They had unleashed a price war - slashed prices and cut margins - with the

result that getting ahead in the AC market now depended on volume

generation. "Volumes became critical for survival," agrees Java. The key

objectives of the "Big Bang" were, therefore, to increase revenues from sales
achievements, and make Voltas the lowest-cost manufacturer. "Economies of

scale were critical," he adds.

Product comes first

The first key initiative was to revamp the product itself. Market research by

Voltas showed a less-than flattering customer perception of the company's air

conditioners: the consensus seemed to be that Voltas ACs was old-fashioned,

outdated, bulky dabbas.

Voltas had not benchmarked its products against MNC offerings, which were

superior technologically and aesthetically, as well as competitively priced. The

company had no model catering to the low-end market, nor any that marked

the shift in ACs from premium to affordable, or luxury to comfort.

"The challenge was not only to come up with a range that matched

competition, but to come up with it in a cost-effective manner. We needed a

partner that could not only provide us with technology, but also help in

keeping the manufacturing cost low," says Java.

That partner came up in Fedders International, a leading player in the US

room AC market, with a worldwide presence, with which Voltas signed a 50:50

manufacturing only joint venture in 2001. There were several immediate

benefits from the JV.

First, it helped Voltas plug into Fedders' technology and design know-how to

launch new-generation products - Voltas was allowed access to Fedders' R&D

centres in Singapore and Florida. The result was the Vertis brand, with a

range that matched competitors' offerings - it had features like purification

filters, ionisers to kill bacteria, economy mode to save on electricity and so on.

In fact, between 2001 and 2004 Voltas launched over 74 new products,

revamping its entire product line. This includes industry firsts such as a 1.5

tonne AC - now a staple product offering.

N fact, Voltas claims that global sourcing has helped it become the lowest-

cost manufacturer in India. In the past five years, material costs for window

ACs have dropped 20 per cent, from Rs 10,400 per unit to under Rs 8,000 a

unit, while the conversion cost has come down by a remarkable 60 per cent,

from Rs 2,000 a unit to Rs 650 a unit.

Another move - literally, this time - that helped Voltas was shifting its

manufacturing base, in 2000, from Thane to Dadra, which is a sales tax-

exempt zone. The company has passed on that 12.5 per cent saving to its

consumers, which naturally has helped sales.

Channel revamp
Of course, it was not enough to just spruce up its offerings. Voltas also

needed to reach out to new markets and new customers. Which meant

shaking up its distribution network.

The first step was to weed out non-performing dealers. Voltas identified some

300 of its 650 dealers - close to half - as non-performing. They were given

strict deadlines to clean up their acts - while 200 dealers upgraded their

performance to meet the new, higher standards Voltas demanded; about 100

were shown the door.

200 new dealers, taking Voltass dealer network to 750 by 2001, promptly

replaced them. At present, the company has about 2,000 dealers, which will

be hiked to 3,500 by the year-end, while franchisee spread will increase from

350 to 500 over the same period.

Back in 2001, dealer confidence was low and the default rate high. The trend

was towards single-product dealers, who were "supported" through credit

extensions. Now Voltas put in place a dealer-friendly policy that offered

subsidies and incentives, but also raised the performance bar.

The company signed memoranda of understanding with the dealers, clear

spelling out the operational procedures and norms to be followed and the

scope of work between the dealer and Voltas.

Voltas set aside 1 per cent of its turnover for training and development of its

channel partners. Money was pumped into dealer infrastructure, manpower

training (with certification programmers for all employees), sharing costs of

mobile vans, cooperative ads and so on.

Says a Voltas marketing executive, "Dealer satisfaction is important as we are

no longer into direct selling and servicing in the residential AC market. Unless

they are satisfied, they can't satisfy the customer."

Changes were also made in the after-sales part of the business. Voltas's

earlier model was of direct servicing where the company sent out its own AC

engineers to attend to complaints. Now, it made the dealers responsible for

customer care - and in one stroke, cut its workforce by more than a third, from

370 to 216.

Even the dealers have strict guidelines on interacting with customers and

responding to complaints. How many servicemen are required, what kind of

servicing kit is required, what spare parts must always be there, the dress

code of a servicemen - everything is spelt out for the dealer.

Time targets - under four hours in the metros - have also been set for

responding to customer calls. And since the dealers and the head office are

connected through a SAP system, all transactions are online and transparent.

Brand building
When the Tata management laid down its ultimatum, Voltas knew it needed to

focus on the demand for ACs in homes. While room AC sales were growing at

26 per cent, household penetration was a mere 2 per cent - the potential was

tremendous.

Say Manglokar of AT Kearney, "A long relation with the consumers can have

its pros and cons. In Voltas's case, the cons were more. It lacked the

freshness that the MNCs provided." Voltas's Java agrees. "The brand recall

was poor and we had a fuddy-duddy image. The task at hand was to

transform Dilip Kumar into Shah Rukh Khan."

To do that, Voltas began by switching ad agencies - from O&M to Euro RSG,

which came up with a new positioning platform: "Acs with IQ." The ads

focused on defining features of Voltas's new product range such as uniform

cooling, energy saving, timers and air filters, with cues of performance and

value-addition through technological innovation.

The campaign kicked off with the Vertis flagship, and went on extend the "ACs

with IQ" proposition to every Voltas AC. A series of print ads spelt out what

was "intelligent" about the range.

Subsequent promotions have focused on themes like customer service and

low costs of ownership. In 2004, Voltas changed its theme somewhat, staking
claim to the aspirational product platform - campaigns focused on its new Rs

9,900 AC, a first in the market. Celebrities like Shah Rukh Khan and Shoaib

Akhtar were also roped in to strengthen the brand.

Of course, not all this comes cheap: between 2001 and 2004, Voltas invested

more than Rs 50 crore (Rs 500 million) in branding initiatives; last year, it

spent Rs 17 crore (Rs 170 million) on marketing.

The figure for this year is somewhat higher: Rs 20 crore (Rs 200 million). But

then, the theme has changed too. Since the focus now is on capturing a larger

share of the mass market, Voltas's new campaign is aimed at the aam aadmi,

and has been shot in a distinctly non-urban environment. The tagline, too, has

changed - Voltas is now "India ka AC".

Did it work?

In a word, yes. Within a year of the Big Bang, Voltas's market share started

rising. From 7 per cent in 2001, it climbed to 9.2 per cent the next year and is

now at around 16 per cent. Exults Java, "The numbers that we were

achieving in a year, we now get in a month."

 INTRODUCTION OF STUDY

FINANCIAL

ANALYSIS

OF

VOLTAS

LIMITED
 FINANCIAL ANALYSIS FOR

THE YEAR ENDED 31ST MARCH 2003

RATIO ANALYSIS

(1) CURRENT RATIO = CURRENT ASSETS

CURRENT LIABILITIES

CURRENT ASSETS = RS. 55066.78

CURRENT LIABILITIES = RS.51752.29

55066.78 = 1.06:1
51752.29

(2) DEBT EQUITY RATIO = LONG TERM DEBT

SH. HOLDERS EQUITY

LONG TERM DEBT = RS. 9078.89

SHARE HOLDERS EQUITY = RS. 16116.29

9078.89 = 0.56:1
16116.29
(3) DEBTOR TURN OVER RATIO = NET CREDIT SALE

AVG. DEBTORS

NET CREDIT SALE = RS. 116545.78

AVG. DEBTORS = OPENING DEBTOS+ CLOSING DEBTORS

2

AVG. DEBTORS = 33261.49+2429.19 = 57490.68

2

= 116545.78 = 2.02
57490.68

(4) FIXED ASSETS TURNOVER RATIO = NET SALES

FIXED ASSETS

NET SALES = RS.116545.78

FIXED ASSTES = RS. 12187.44

116545.78 = 9.7
12187.44
(5) INVENTORY TURNOVER RATIO = COST GOODS SOLD
AVG INVENTORY

COST GOODS SOLD =RS.95431.38

AVG INVENTORY =OPENING INVENTORY + CLOSING INVENTORY

2

AVG INVENTORY = 12792.06 + 12305.50 = RS. 25097.56

2

= 95432.38 = 3.8
25097.56

(6) GROSS PROFIT RATIO = [Link] * 100

NET. SALES

[Link] = R.S 2905.17

NET. SALES = R.S 116545.78

= 2905.17 * 100 = 2.49 %

16545.78
 (7) NET PROFIT RATIO = [Link] *100
NET. SALES

[Link] = R.S 2557.53

[Link] = R.S 116545.78

= 2557.53 *100 = 2.19 %

116545.78

(8) COST OF GOODS SOLD RATIO = COST OF GOODS SOLD *100

[Link]

COST OF GOODS SOLD = R.S 95431.38

NET. SALES = R.S 116545.78

= 95431.38 *100 = 81.88 %

116545.78
 FINANCIAL ANALYSIS FOR

THE YEAR ENDED 31ST MARCH 2004

RATIO ANALYSIS

(1) CURRENT RATIO = CURRENT ASSETS

CURRENT LIABILITIES

CURRENT ASSETS = RS. 60794.69

CURRENT LIABILITIES = RS. 54209.49

= 60794.69 = 1.12
54209.49

(2) DEBT EQUITY RATIO = LONG TERM DEBT

SH. HOLDERS EQUITY

LONG TERM DEBT = RS. 8323.24

SHARE HOLDERS EQUITY = RS. 18900.26

8323.24 = 0.44:1
18900.26
(3) DEBTOR TURN OVER RATIO = NET CREDIT SALE

AVG. DEBTORS

NET CREDIT SALE = RS. 127319.30

AVG. DEBTORS = OPENING DEBTOS+ CLOSING DEBTORS

2

AVG. DEBTORS = 35770.56+33261.49 = 34516.025

2

= 127319.30 = 3.7
34516.025

(4) FIXED ASSETS TURNOVER RATIO = NET SALES

FIXED ASSETS

NET SALES = RS. 127319.30

FIXED ASSTES = RS. 12259.19

127319.30 = 10.4
12259.19
(5) INVENTORY TURNOVER RATIO = COST GOODS SOLD
AVG INVENTORY

COST GOODS SOLD =RS. 105453.95

AVG INVENTORY =OPENING INVENTORY + CLOSING INVENTORY

2

AVG INVENTORY = 15866.17 + 12788.16 = RS. 14327.17

2

= 105453.95 = 7.4
14327.17

(6) GROSS PROFIT RATIO = [Link] * 100

NET. SALES

[Link] = R.S 4687.28

NET. SALES = R.S 127319.30

= 4687.28 * 100 = 3.68 %

127319.30
 (7) NET PROFIT RATIO = [Link] *100
NET. SALES

[Link] = R.S 3903.02

[Link] = R.S 127319.30

= 3903.02 *100 = 3.06 %

127319.30

(8) COST OF GOODS SOLD RATIO = COST OF GOODS SOLD

*100
[Link]

COST OF GOODS SOLD = R.S 105453.95

NET. SALES = R.S 12319.30

= 105453.95 *100 = 82.82 %

12319.30
 FINANCIAL ANALYSIS FOR

THE YEAR ENDED 31ST MARCH 2005

RATIO ANALYSIS

(1) CURRENT RATIO = CURRENT ASSETS

CURRENT LIABILITIES

CURRENT ASSETS = RS. 74699.68

CURRENT LIABILITIES = RS. 61752.72

= 74699.68 = 1.21
61752.72

(2) DEBT EQUITY RATIO = LONG TERM DEBT

SH. HOLDERS EQUITY

LONG TERM DEBT = RS. 10640.4

SHARE HOLDERS EQUITY = RS. 19351.15

10640.4 = 0.55:1
19351.15
(3) DEBTOR TURN OVER RATIO = NET CREDIT SALE

AVG. DEBTORS

NET CREDIT SALE = RS. 138666.12

AVG. DEBTORS = OPENING DEBTOS+ CLOSING DEBTORS

2

AVG. DEBTORS = 36132.81+35770.56 = 35951.68

2

= 138666.12 = 3.85
35951.68

(4) FIXED ASSETS TURNOVER RATIO = NET SALES

FIXED ASSETS

NET SALES = RS. 138666.12

FIXED ASSTES = RS. 8242.73

138666.12 = 16.82
8242.73
(5) INVENTORY TURNOVER RATIO = COST GOODS SOLD
AVG INVENTORY

COST GOODS SOLD =RS. 134217.65

AVG INVENTORY =OPENING INVENTORY + CLOSING INVENTORY

2

AVG INVENTORY = 24000.58 + 15865.65 = RS. 19933.11

2

= 134217.65 = 6.73
19933.11

(6) GROSS PROFIT RATIO = [Link] * 100

NET SALES

[Link] = R.S 5766.02

NET. SALES = R.S 138666.12

= 5766.02 * 100 = 4.15 %

138666.12
 (7) NET PROFIT RATIO = [Link] *100
NET SALES

[Link] = R.S 5041.33

[Link] = R.S 138666.12

= 5041.33 *100 = 3.63 %

138666.12

(8) COST OF GOODS SOLD RATIO = COST OF GOODS SOLD

*100
[Link]

COST OF GOODS SOLD = R.S 134217.65

NET SALES = R.S 138666.12

= 134217.65 *100 = 96.79 %

138666.12
 STATEMENT OF OBJECTIVE.
Ratio analysis is the most important tool of analyzing these financial

statements. It helps the Reader in giving tongue to the mute heaps of figures

given in financial statements. The figures then speak of liquidity, solvency,

profitability etc. of the business enterprise.

SOME IMPORTANT OBJECTIVES ARE:

(1) Helpful in analysis of financial statements.

(2) Simplication of accounting data.

(3) Helpful in comparative study.

(4) Helpful in forecasting.

(5) Estimate about the trend of the business.

(6) Effective control.

(7) Study of financial soundness.

(8) Helpful in locating weak spots of the business.

 RESEARCH METHDOLOGY
Research in common refers to search for knowledge. It is scientific

system and for pertinent information on specific topic. It may be

understood as a science of studying how research is done scientifically.

RESEARCH DESIGN

Research Design is a framework in which research resides. The research

opted is EXPLORATORY. It is of flexible nature. It is based on secondary

data. So researchers have to adjust them according to changing environment.

SAMPLE DESIGN

A sample is representative of whole population. Researchers while conducting

research has to draw certain sample for study purpose. A sample design is a

definite plan determined before any data are actually collected for obtaining

samples for the same study. Sample design of my study is RANDOM

SAMPLING.
DATA COLLECTION

The data is of two types: PRIMARY AND SECONDARY. Data are the facts

presented to the researcher from the study of environment.

DATA

PRIMARY SECONDARY
DATA DATA

PRIMARY DATA in this research was collected through continuous

meeting with employees.

SECONDARY DATA was collected through websites of company.

After the collection of data, it is edited and edited data is put

into a form that makes research meaningful.

ANALSIS AND INTERPRETATION

COMPARATIVE

ANAYLYSIS

OF

VOLTAS

LIMITED
 CURRENT RATIO

2003 2004 2005

1.06:1 1.12:1 1.12:1

CURRENT RATIO

1.25
1.2 1.21
1.15
RATIO

1.12
1.1
1.05 1.06
1
0.95
2002-03 2003-04 2004-05
YEAR

1. Current ratio is a relationship of current assets to current liabilities & it

is computed to position of the firm.

2. Standard ratio of industries is 1:1.

1. OBJECTIVE:

The objective of calculating current ratio is to asses the ability of the

Firm to meet its short-term liabilities promptly.

2. In this comparative study, we analyze that the current assets

of the firm is increasing in comparison to liabilities, which is good sign for a

firm to meet its short-term liabilities promptly.

3. A very high ratio means, funds are idle, which is not a good sign.

4. A higher ratio indicates poor investment policies of the management &

poor inventory control while a low ratio indicates lack of liquidity &

shortage of working capital.

5. Care should be taken that ratio should neither be higher nor be lower.
 DEBT EQUITY RATIO:

2003 2004 2005

.56:1 .44:1 .55:1

DEBT-EQUITY RATIO

0.6 0.56 0.55

0.5 0.44

0.4
RATIO

0.3

0.2

0.1

0
2002-03 2003-04 2004-05
YEAR

1. The debt equity ratio is computed to ascertain soundness of the long-

term financial position of the firm.

2. Debt-equity ratio indicates the proportion between shareholder s

funds & long-term borrowed funds.

3. A higher ratio indicates a risky financial position while a lower ratio

indicates safer financial position.

4. In this, we analyze that the use of debt in 2004 is less than in 2003 &

2005; therefore, debt-equity ratio in 2004 is less than 2003 & 2005.

5. OBJECTIVE: the objective of debt-equity ratio is to arrive at an idea

of amount of capital supplied to a firm.

6. This ratio is sufficient to assess the soundness of long-term financial

position.

7. It also indicates the extent to which the firm depends upon outsiders

for its existence.

 DEBTOR TURNOVER RATIO:

2003 2004 2005

2.02 3.70 3.85

DEBTOR TURNOVER RATIO

3
RATIO 2 3.7 3.85
2.02
1
0
2002-03 2003-04 2004-05
YEAR

1. This ratio is computed to establish relationship between (net

credit sales & avg. Debtors).

2. In this comparative study we analyse that ratio is increasing,

which is a good sign for a firm. High ratio is better.

 INVENTORY TURNOVER RATIO:

2003 2004 2005

3.80 7.40 6.73

INVENTORY TURNOVER RATIO

RATIO 4 7.4 6.73

3.8
2

0
2002-03 2003-04 2004-05
YEAR

1. Inventory turnover ratio establishes relationship between the cost of

goods sold during a given period & the avg. Amount of inventory

carried during that period.

 2. In this comparative study, we analyse that the inventory turnover ratio

in the year 2004 is higher in comparison with the years 2003 &

[Link] turnover indicates a unit of investment in stocks is

producing more sales.

3. OBJECTIVE:

The objective of computing inventory turnover ratio is to ascertain

whether investment in stock has been judicious or not, i.e., that only the

required amount is invested in stock.

Higher the ratio, the better it is since it indicates that more sales are being

produced by a rupee of investment in stock.

Thus, only a proper inventory turnover ratio enables the business to

earn a reasonable margin of profit.

 FIXED ASSETS TURNOVER RATIO:

2003 2004 2005

9.70 10.40 16.82

FIXED ASSETS TURNOVER RATIO

20 16.82
15
9.7 10.4
RATIO 10

0
2002-03 2003-04 2004-05
YEAR

1. Fixed assets turnover ratio shows the relationship between fixed

assets & net sales indicating how efficiently they have been used in

achieving the sale.

When it is compared with

A previous period or industry

Standard, it indicates whether

The investment in fixed assets

Has been judicious or not.

2. In this comparative study, we analyse that ratio is increasing; this indicates

efficient utilization of fixed assets

3. OBJECTIVE & SIGNIFICANCE:

A high ratio indicates efficient utilisation of fixed assets. On the other hand, a

low ratio indicates inefficient utilisation.

An increase in the ratio indicates that there is improvement

in the utilisation of fixed assets.

If there is a fall in the ratio, it indicates that the fixed assets

remained idle
 GROSS PROFIT RATIO:

2003 2004 2005

2.49% 3.68% 4.15%

GROSS PROFIT RATIO

3.68 4.15
6
2.49
4
RATIO
2
0
2002-03 2003-04 2004-05
YEAR

1. This ratio establishes relationship of gross profit on sales to next sales

of a firm, which is calculated in percentage

2. In this comparative study, we analyse that gross profit of the firm is

increasing which is very good sign, as higher ratio indicates firm in

better position
3. OBJECTIVE: gross profit ratio is a reliable guide to the adequacy of

selling price and efficiency of trading activities.

4. This ratio should be adequate to cover the administrative &

marketing expenses.
 NET PROFIT RATIO:

2003 2004 2005

81.88% 82.82% 96.79%

NET PROFIT RATIO

100
96.79

95

90
RATIO

85 82.82
81.88

80

75

70
2002-03 2003-04 2004-05
YEAR

1. Net profit ratio shows the percentage of net profit earned on the

sales. Net profit is computed by deducting all direct cost & indirect

cost.
 .
CONCLUSION & FINDINGS

1. We find that the current assets of the firm is increasing in

comparison to liabilities, which is good sign for a firm to meet its

short-term liabilities promptly

2. We find that that the use of debt in 2004 is less than in 2003 &

2005, therefore debt-equity ratio in 2004 is less than 2003 & 2005.

3. We find that Debtor turnover is increasing which is good sign for

firm
 SUGGESTIONS AND RECOMMENDATIONS

Current Ratio:

From this study, we observe that the current ratio of the firm is increasing in

each year. A care should be taken that the firm should not have very high or

very low ratio.

As very high ratio indicates poor investing policy of management, and very

low indicates lack of liquidity and shortage of working capital.

DEBT Equity Ratio:

Debt equity ratio indicates the proportion between shareholders fund and

long-

term borrowed funds. A care should be taken that this ratio should not be so

high, as higher ratio indicates a risky financial position.

DEBTOR TURNOVER RATIO:

Ratio is increasing, which is a good sign for a firm. As higher ratio is better
and

it indicates that debts are being collected more promptly ratio indicates a

risky financial position .

INVENTORY TURNOVER RATIO:
From this study we conclude that the inventory turn over in the year 2004, is

higher in comparison with the year 2003 & [Link] turn over indicates

more sales are being produced, but after increasing in 2004, it reduced in

2005, which is not a good

sign, as low turn over indicates insufficient use of investment. It should be

higher, as only proper inventory turnover ratio enables the business to earn a

reasonable margin of profit.

FIXED ASSET TURN OVER RATIO:

The study clearly shows that ratio is increasing; this indicates efficient

utilization of fixed assets. High ratio indicates efficient utilization of fixed

assets and it makes improvement in proper utilizing them.

GROSS PROFIT RATIO:

Gross profit ratio is reliable guide to the adequacy of selling price and

efficiency of trading activity. In this study we observe that GROSS PROFIT is

increasing, which is very good sign. This ratio should be adequate to cover

the administrative and marketing expenses.

 LIMITATIONS
Ratio analysis is a very important tool of financial analysis. However, despite

its being indispensable, the ratio analysis suffers from a number of limitations.

These limitations should be kept in mind while making use of the ratio

analysis

(1) False accounting data gives false ratios.

(2) Comparison not possible if different firms adopt different accounting

policies.

(3) Ratio analysis becomes less effective due to price level changes.

(4) Ratio may be misleading in the absence of absolute data.

(5) Limited use of single ratio.

(6) Lack of proper standards.

(7) Ratio alone are not adequate for proper conclusions.

(8) Window dressing.

(9) Effect of personal ability and bias of the analyst.

 ANNEXURE

Project of Comparative and Financial Analysis of

Voltas Ltd. was calculated through Balance Sheet of
Year 2002-03, 2003-04, 2004-05

BALANCE SHEET OF YEAR ENDED 2003

 BIBLOGRAPHY
(1) [Link]

(2) Annual reports of Voltas ltd.

(3) [Link]

(4) [Link]

(5) [Link]

(6) RESEARCH METHODOLOGY BY C R KOTHARI