Voltas’ mining & construction gear division hopes to hit pay dirt in India

The mining and construction equipment division of Voltas Ltd, which currently earns more than two-thirds of its revenues from international operations, expects India operations to pick up.

According to Ranjit Ravindran, Business Head – Mining, Voltas Ltd, higher infrastructure spending by the government coupled with the disinvestment plan will help grow the division’s’India business.

“International business contributes about 70 per cent of our revenues and increasing year-on-year. The share of India business is also likely to grow moving forward,” Ravindran told BusinessLine .

The segment is likely to see a growth of 5-8 per cent both from domestic and international businesses this year.

PSUs are set to take initiatives to bring in efficiencies in operations. “If government holding in these PSUs comes down, we will see a lot of investments by FIIs happening. So, the independence and accountability of boards will become high. That is where bringing in global standards in maintenance and safety practices will be required,” he said.

The ₹6,693-crore Voltas has three divisions — Unitary Products that deals with consumer durables such as air-conditioners, air-coolers, and other refrigeration products; Projects, where it acts as an MEP operator both within the country and overseas; and Engineering Products and Services, which has two segments, Textile Machinery and Mining & Construction Equipment.

The consumer durables business accounts for 50-51 per cent of the company’s total turnover; the projects group contributes 47-48 per cent while the remaining comes from the Engineering Products and Services business.

Though the third segment’s share in the turnover is small, it contributes in terms of profitability because of its “asset light model”, he pointed out.

According to Ravindran, the Engineering Products and Services business has consciously moved away from being a “pure distribution outlet” to an “independent service outlet” in the past five-six years.

Focus on consolidation

Ruling out any immediate plans of diversifying into new geographies, he said that consolidation would be the key to growth in the current economic scenario. Diversification cannot always ensure that the risks are mitigated.

The company works with Vale in Mozambique, which accounts for about 95 per cent of its revenues. The remaining 5 per cent comes from Jindal Steel in Africa.

“It is a conscious decision (not to diversify) otherwise we could have expanded to other African countries because we work there through Tata Africa which has presence in almost all the countries,” he said.

The Indian mining industry is likely to see a lot of consolidation and public sector organisations will look at optimisation of assets.

“Lot of consolidation and asset optimisation would happen in the industry, particularly with public sector companies where there is a dearth of manpower and skill-sets,” he pointed out.