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AGM held on AUGUST 12, 2002

Voltas no 2 player in refrigerator biz

  • Voltas has gained market share in the refrigerators segment and currently holds the number two position against number five last year, said the company`s chairman Ishaat Hussain, while addressing the annual general meeting of the shareholders.

  • The biggest competitor for the consumer durables major in the refrigerators segment continues to be LG, who holds the numero uno postion. Voltas contract manufactures refrigerators for LG.

  • Hussain also informed the shareholders that the company`s board plans to set off deferred revenue expenditure (DRE) pertaining to voluntary retirement scheme (VRS) of Rs 53.17 crore against the share premium account. As on March 31, 2002, Voltas had a credit of Rs 59.71 crore in its share premium account.

  • The proposal for financial restructuring and recommended application/utilisation of the share premium account for setting off the DRE is in accordance with the provision of Section 78 read with Section 100 of the Companies Act, 1956, which will be subject to approval of the shareholders and confirmation of Bombay High Court.

  • According Hussain, `Voltas` net profit is expected to jump in the next three years on account setting off DRE against the share premium account. This financial restructuring is expected to enhance shareholder value that will result in increase in earning per share and return on capital employed.`

  • Voltas has streamlined manpower by introducing VRS during the last three years. The cost of VRS, including the additional gratuity and leave encashment liability arising therefrom, is treated as DRE and is amortised to the profit and loss account over a period of 36 months.

  • The balance in DRE as on March 31, 2002 was Rs 53.17 crore and there would be further accretions thereto arising out of VRS during the year 2002-03.

  • On the issue of Voltas International Ltd, Hussain said that the 100 per cent subsidiary of Voltas was merged with self with effect from April 1, 2001 and the manufacturing plant for room air conditioners at Dadra was transferred to the joint venture company Fedders International Inc, USA, with effect from October 1, 2001.

  • While the Fedders manufactures Voltas brand air conditioners, Voltas continues to sell 60 per cent of the production and the balance 40 per cent is sold by Fedders.

  • `In the air conditioner market, Voltas is able to compete better as the cost of manufacturing air conditioners by the joint venture company is low and has been coming down. The product is far superior and has additional features,` said Hussain.

  • The order book position for air conditioners was comfortable and carry forward orders were higher by nearly 20 per cent, he concluded.

Source : IRIS

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