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Directors Report of Voltas Ltd.

Mar 31, 2014

To the Members

The Directors present their Sixtieth Annual Report and the Audited Statement of Accounts for the year ended 31st March 2014.

FINANCIAL RESULTS

Rs.in Crores

Standalone Consolidated

2013-14 2012-13 2013-14 2012-13

2. Revenue from Operations (Gross) 5188 5618 5303* 5584*

Profit for the year after meeting all expenses but before interest, depreciation and exceptional items 295 283 366 329

Interest 16 27 23 33

Depreciation and amortization 19 22 25 28

Profit before exceptional items 260 234 318 268

Exceptional items (Net) (3) 8 22 12

Profit before tax 257 242 340 280

Provision for taxation 76 62 94 73

Profit after tax 181 180 246 207

Minority Interest and Share of (Profit)/Loss of Associate — — (1) 1

Profit after Minority Interest and Share of (Profit)/Loss of Associate 181 180 245 208

Adding thereto:

- Balance brought forward from the previous year 257 159 353 225

- Foreign Exchange Translation Difference — — 9 (3)

- Credit on Dividend Distribution Tax 4 — 4 —

- Reserves and Surplus transferred on divestment of a subsidiary — — — 8

Profit available for appropriations 442 339 611 438 Appropriations:

- General Reserve 20 20 30 22

- Proposed Dividend 61 53 61 53

- Dividend Distribution Tax 10 9 10 9

- Legal and Special Reserve — — 1 1 Leaving a balance to be carried forward 351 257 509 353

* Consolidated turnover is after eliminating inter-company purchase/sales transactions.

DIVIDEND

3. The Company''s dividend policy is based on the need to balance the twin objectives of appropriately rewarding its shareholders with dividend and of conserving resources to meet its future needs. The Directors recommend a dividend of Rs. 1.85 per equity share of Rs. 1 each (185%) for the year 2013-14, including a special Diamond Jubilee dividend of 25% (2012-13: 160%), based on the Company''s performance.

OPERATIONS

4. The year gone by was a mixed one, with continued sluggishness in the Indian economy, impacting the topline, ofset by the Company''s better margins and profitability. With the long-anticipated economic recovery being further delayed, the Index of Industrial Production (IIP) continued to tread in the negatives. For a major part of the year the Indian Rupee, after plunging to new lows, remained in the Sixties to the US Dollar amid excessive volatility. Despite a change of guard at the Reserve Bank of India, there was little respite in terms of interest rates and infation. For the projects business in particular, new investments were few and far between, with some reliable sources reporting that capital outlays lingered at the decade''s lowest levels. The pace of execution also posed challenges, leading to both time and cost overruns that contributed to margin dilution in projects. On the other hand, despite the early onset of monsoons as well as dampened consumer sentiment, the Room AC business (Primary Market) reported growth of 6.5% as against industry-wide AC sales de-growth of around 8%, as per internal estimates. In the Secondary Market, the growth was 19% as against industry growth of 11% as per GFK-Nielsen. The Company''s performance in the overall depressed environment demonstrated its resilience. While Consolidated Sales and Income from Operations was Rs. 5303 crores, as compared to Rs. 5584 crores in the previous year, the profit after Tax & Minority Interest was higher at Rs. 245 crores as against Rs. 208 crores last year.

5. As a direct outcome of adverse macro-economic conditions in India, the Domestic Projects business continued to face headwinds, principally the slow pace of execution and delayed payments, putting a strain on working capital and cash flows. However, due to tight control on costs and various measures taken to improve the margins, the overall profitability improved during 2013-14. The Company has consciously placed emphasis on shoring up its domestic project management skills and has initiated a business efciency improvement program using external consultants.

6. While it was a subdued year for the Water business and Rohini Industrial Electricals Limited (RIEL), their integration under Domestic Projects Group (DPG) has been completed. However, RIEL continued to sufer losses on its low-margin ''legacy'' orders, resulting in a further write-down of Rs. 20 crores in the value of the Company''s investment. Nevertheless, the Company reached a settlement with the erstwhile Promoters, leading to purchase of the residual equity shares of RIEL (16.33% shareholding), thereby making it a 100% subsidiary of the Company.

7. The International projects business, like much of the construction industry in the Middle East, continued to grapple with cost-overruns. The Management conducts periodic techno-commercial reviews across projects and in line with the requirements of AS-7, reckons the cost overruns, if any, required for completion of the projects. Revenues from claims are accounted based on their certification. Execution of some on-going overseas projects was delayed, which resulted in further extension of the completion dates and caused certain contractual disputes. Consequently, there were cost overruns which have been accounted for during 2013-14 and claims for additional revenue and extension of time have been raised. Due to significant upward revision in the total estimated costs to complete a major project in Qatar, the Sidra Medical and Research Centre Hospital (Onerous contract), the Company had in the previous years accounted for the cost overruns in accordance with AS-7. Though the Sidra project is over 93% complete, additional costs to come have been estimated for the revised completion date along with possible enhancement of revenue from variations/claims. At the same time, there continue to be uncertainties in the process of approval of variations and complexities in the nature of the project, putting stress on the cash flows of the project. The final completion schedule and other terms are yet to be finalized between the Main Contractor and the end Customer and could revise the Company''s current cost estimates and entitlements. Nevertheless, the Company is pursuing its entitlements vigorously.

8. Overall, as part of a conscious emphasis to reduce capital employed, the Projects businesses have sustained their focus on pursuing commercial entitlements and closing existing projects. The forward strategy is to remain selective in the choice of new Project undertakings, with due consideration of risk-related parameters. Any push for new orders will largely focus on identified areas of opportunity. The year under review saw some success in the form of good orders being won, both overseas and in India. The consolidated order book for the Electro-Mechanical Projects business was Rs. 3612 crores, per end March 2014, yielding healthy visibility for the

coming year. The Company continues to deal objectively with the challenges faced and has framed an appropriate business strategy to seize future growth opportunities.

9. Despite various hurdles, the Engineering Products business had an eventful year marked by exceptional performance. The Mining & Construction Equipment business continued to face several policy constraints, with mining activities still frozen in some States. As a consequence of global consolidation in the mining industry, the Company had transferred dealership rights for certain products which resulted in an exceptional income of Rs.17 crores. The transfer also brought about a one-time reversal of certain cost provisions earlier made in compliance with conservative accounting practices, thereby resulting in an improvement in the bottom line. Meanwhile, operations largely continued to build on existing client relationships, while focusing on greener pastures overseas. The ongoing Mozambique venture remains lucrative, providing a natural hedge against difficulties faced in India.

10. The revised and restructured Textile Upgradation Fund (TUF) scheme is yet to have the desired impact in boosting the demand and reviving the fortunes of the Textile industry. The prevailing uncertainties and subdued investment climate, coupled with Rupee devaluation and volatility, weakened sentiments and led to postponement of equipment orders. However, there was some respite in cotton and yarn pricing, boosting exports of textiles from India and helping the industry show signs of revival. Meanwhile, the Textile Machinery business continued to ramp up capabilities in its post-spinning segment by adding principals and products. Overall, the Textile Machinery business was able to sustain its performance and strengthen its offerings.

11. The Company''s Unitary Cooling business sustained its hard-won leadership position and its performance was commendable, given the background of unfavorable climate and poor consumer sentiment. Responding to the increased demand in tier 2 and tier 3 towns, as well as the rise in rural demand driven by good monsoons, the business enhanced its penetration, with the number of touch points now exceeding 6500 outlets. The success is also owed to conscious brand development and communication initiatives, which are based on extensive market research. Along with substantial growth in both volume and market share of Room ACs, the business enjoyed the benefits of better traction in Commercial Refrigeration products through sizable OEM orders. Overall, the performance of the business exceeded expectations and ended the year with a substantial improvement vis-a-vis last year in all financial parameters.

FINANCE

12. The Indian economic environment remained lackluster for most part of the year, with key indicators showing a declining trend. From a solid 7 - 8 percent annual increase in gross domestic product (GDP) in recent years, growth slowed down to about 5 percent by the end of the year. Inflation rates also remained high, due to the inability to contain supply side issues and boost production. There has been some respite in the Current Account Deficit, which moderated from a high of 4.7% of GDP in 2012-13 to just 1.7% in 2013-14. The Central bank has maintained high interest rates and tight liquidity conditions with a strong determination to lower inflation.

13. Having realized the critical importance of cash in these difficult times, the Domestic businesses have responded with renewed strategies for cash conservation, despite several challenges. The Unitary Cooling business continues to fare well primarily due to tight control on working capital.

14. The International Projects business continued to remain in the grip of recession, marked by widespread delays in settlements and release of payments. In response, project- specific task forces have been constituted, with clear roles and responsibilities directed towards faster completion and quick settlement of commercial entitlements. The drive towards speedy closure of projects has yielded some results, but there is still much to be done. Some on-going projects like the Sidra hospital at Qatar and other large projects in UAE, continue to impact the cash flows of the Company.

15. Overall, the cash situation has been appropriately managed with a satisfactory liquidity position largely comprising investments in Liquid and Liquid Plus Mutual Funds of Rs. 643 crores (2012-13: Rs. 318 crores). Borrowings specific to overseas projects have also been contained at a level of Rs. 193 crores as compared to Rs. 212 crores last year. The Management continues to focus on cash flow, including inventories and receivables. Furthermore, the surplus funds remain invested in low-risk Debt Mutual Funds and are periodically monitored by the Investment Committee of the Board so as to maximize returns with minimal risk.

TATA BUSINESS EXCELLENCE MODEL (TBEM)

16. The Management has decided to participate in the Tata Group level TBEM External Assessment at the Company level during the financial year 2014-15. Accordingly, the Company has focused on standardizing critical processes to harness various synergies between the Business Units.

17. The Company participated in the Tata Innovista program, a group-level initiative to promote innovation, through six Innovation projects related to either process/product improvements or enhancement of customer experience. Three of these projects were selected for regional rounds, with one project making it through to the final round. The Company also took part in ''Deep Dive Collaborative Benchmarking'' studies conducted by Tata Quality Management Services and two of its processes were selected as ''best practices'' across the Tata Group.

18. To further facilitate its quest for Business Excellence (BE), the Company continues to develop a pool of BE Champions and TBEM assessors. There are over 90 BE Champions, of whom, more than 30 are certified to participate in Tata Group level TBEM External Assessments. The contributions of the Voltas External Assessors won appreciation at the Group level Business Excellence Convention in December 2013, with two assessors being recognized as ''Star Assessors''.

IT INITIATIVES

19. The Company''s IT function focused on critical stakeholders, viz. customers and vendors and undertook major initiatives in Unitary Products Business Group (UPBG) and the Domestic Projects Group (DPG).

20. In order to provide better customer service, UPBG implemented Siebel, a leading software solution in the Customer Relationship Management (CRM) space. This will help closer monitoring of operations and facilitate faster and better service to UPBG customers. Phase I of this project has been successfully completed with service functionality rolled out to all UPBG''s branches and service partners. Phase II of this project is under implementation and would be completed during 2014-15.

21. At the same time, to shorten the bill processing cycle for vendors, DGP has outsourced its Accounts Payable process. Some of the key benefits are faster invoice processing and access to real-time information on the status of Vendor invoices through a self-service portal.

22. Recognizing the critical need for Knowledge Management, the International Operations Business Group has launched a Portal capturing both tacit and explicit knowledge of its workforce. The portal serves as a platform through which employees can collaborate and share knowledge.

23. Many improvements were carried out to ensure a robust and secure IT infrastructure. Compliance and security remain important considerations for Voltas. IT has consequently partnered with all Business Units to help stabilize their Governance & Risk Compliance (GRC) implementation and has been regularly delivering improvements in the Company- wide SAP Access and Authorization environment.

COMMUNITY DEVELOPMENT

24. The Company actively pursued its core commitment to serving its communities, with a focus on empowering under-privileged young job-seekers through ''Employability'' initiatives, designed to impart opportunity. The Company thus, provides training to less fortunate youth in Air Conditioning and Refrigeration. Its long-standing association with Joseph Cardijn Technical School and Bosco Boys Home (Mumbai) and GMR Varalakshmi Foundation (at 5 centers in diferent locations) are expressions of the Company''s Corporate Sustainability mission to create a talent pool, serving Specific targeted markets. Two initiatives are also in the pipeline for partnering with Indian Hotels to start similar training centers with ITI Lonavala and ITI Chindwara.

25. Similarly, in partnership with ICICI Academy of Skills, the Company has extended support in establishing a Central Air Conditioning Centre at Coimbatore. This Centre will provide vocational training to 120 youth per year across Tamil Nadu, Kerala, Karnataka and Andhra Pradesh.

26. The Company has simultaneously embedded Afirmative Action in its HR policy and in other business activities. Voltas also supports the education of the children of the Kathkari tribe in partnership with local institutions, by providing mid-day meals, books and stationery as well as funding after-school coaching activities.

27. The Company continued with its volunteering initiatives as a means for employees to personally make societal contributions, allowing them to engage together with a shared purpose. More than 200 volunteers signed on for the Tata Sustainability Group''s newly-launched initiative, Tata Engage and have contributed their time for volunteering. Some innovative drives also took shape, such as ''Safety from electricity'', conducted in the remotest of villages in MP and ''Women''s Safety and Hygiene Campaign'' targeting Kathkari women.

28. Under the aegis of Tata Group, a new campaign was launched with the theme of ''Jaago Re - Power of 49'' (PO49), intended to empower women by helping them realize their right of 49% electoral representation in India. The Textile Machinery Division of Voltas at Coimbatore, reached out to women mill workers in and around the Tamil Nadu belt, to help them get registered for voting. Special care was taken to run a party-neutral campaign focused on creating awareness about the importance of exercising one''s vote.

GLOBAL COMPACT AND CARBON DISCLOSURE PROJECT

29. The Company isa signatory to the UN Global Compactand is committed to adhere to its principles. The Communication on Progress for the financial year 2013-14 has been uploaded along with the letter of Support on the Global Compact website.

ENVIRONMENT & SAFETY

30. The Company continued to address matters related to Health, Safety and Environment (HSE) through a variety of initiatives. The Executive Committee, together with the COOs, are responsible for delivering improved HSE performance. The Board has constituted a Safety, Health and Environment Committee comprising three Directors, including the Managing Director for reviewing HSE performance of operations.

31. To improve the consistency of the organization''s approach and the resilience of its Safety controls, the Company implemented OHSAS 18001 and introduced a series of global standards, principles and practices that each operation should adopt. Audits were conducted against these standards and improvements are ongoing. These initiatives have complemented the process of organizational learning, including sharing the lessons based on incidents and best practices.

32. Improving Safety performance continues to be a priority for the Company. This is evidenced by four more businesses attaining ISO 18001 accreditation and four others achieving OHSAS 14001 certification. ISO 18001 is also being implemented atthe Company''s Thane and Dadra Plants.

33. Improvements have been made in the methods of internal communication, knowledge sharing and reporting on Safety matters.There has been adequate worker participation in Safety meetings at project sites, yielding valuable inputs pertaining to the workforce segment. Safety awards have been instituted at project sites and manufacturing locations. Health-related initiatives such as yoga camps and medical checkups have been carried out for employees.

STATEMENT OF EMPLOYEES'' PARTICULARS

34. The information required under Section 217(2A) of the Companies Act, 1956 and the Rules made thereunder, is provided in an Annexure forming part of this Report. In terms ofSection219(1)(b)(iv)ofthesaid Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary of the Company.

APPOINTMENT OF COST AUDITOR

35. The Central Government has approved the appointment of M/s. Sagar & Associates, Cost Auditors, for conducting cost audit for the year ended 31 st March, 2014.

36. The due date for filing the Cost Audit Report with the Ministry of Corporate Affairs for the year ended 31 st March, 2013 was 30th September, 2013 and the Cost Audit Report was filed by the Cost Auditors on 23rd September, 2013.The due date for filing the Cost Audit Report for the year ended 31st March, 2014 is 30th September, 2014.

SUBSIDIARIES AND JOINT VENTURES

37. Pursuant to the Accounting Standard AS-21 issued by the Institute of Chartered Accountants of India, Consolidated Financial Statements presented by the Company include the financial information of subsidiary companies. The Central Government has by General Circular No.2/2011 dated 8th February, 2011, granted general exemption to companies from attaching the accounts of subsidiary companies, subject to certain conditions. As the Company has complied with all the conditions, the annual accounts and other documents of the subsidiary companies are not attached with the Balance Sheet of the Company. Details of capital, reserves, total assets, total liabilities, turnover/income, etc., of the aforesaid subsidiaries form part of the Consolidated Financial Statements. The Annual Accounts of the subsidiary companies are open for inspection by any member/investor and also available on the website of the Company - www.voltas.com. The Company will make the documents/details available, upon request by any member of the Company or its subsidiaries interested in obtaining the same.

38. The slow-down in the economy, especially in the Middle East region, continued during the whole of the year. However, some of the Company''s overseas subsidiaries/joint venture companies performed better in 2013-14 as compared to the previous year and secured good orders to sustain the growth. Thefinancial performance and other details of majoroperating subsidiaries/joint venture companies are given below.

39. Universal Comfort Products Limited (UCPL), a wholly- owned subsidiary of the Company engaged in the business of manufacturing air conditioners, recorded higher turnover of Rs. 928 crores and net profit of Rs. 58 crores for the year ended 31 st March, 2014 as compared to turnover of Rs. 740 crores and profit ofRs. 32 crores in the previous year. UCPL has declared 100% dividend aggregating approx. Rs. 28 crores.

40. Rohini Industrial Electricals Limited (RIEL) is engaged in undertaking turnkey electrical and instrumentation projects for industrial and commercial sectors. RIEL reported turnover of Rs. 99 crores and loss of Rs. 7 crores for the year 2013-14 as compared to turnover of Rs. 81 crores and loss of Rs. 13 crores in the previous year. Voltas purchased the residual shareholding (16.33%), comprising 298211 equity shares, from the Promoters of RIEL and accordingly, RIEL became a wholly-owned subsidiary of the Company with efect from 14th October, 2013.

41. Voltas Oman LLC, a subsidiary of the Company (65% shareholding of Voltas), is engaged in undertaking Engineering, Procurement and Construction (EPC) works for electro- mechanical projects in the Sultanate of Oman. Voltas Oman LLC recorded higher turnover of Omani Rial (RO) 3.519 million and profit of RO 0.053 million as compared to turnover of RO 0.698 million and net loss of RO 0.178 million in the previous year. The economy of Oman has started showing signs of recovery and the Government has budgeted higher expenditure in 2014. Voltas Oman LLC has secured a large and prestigious MEP project for Kempinski Hotel worth RO 17.400 million and expects to sustain the order book position during 2014.

42. Universal Voltas LLC, Abu Dhabi, a joint venture company engaged in the business of electro-mechanical projects and operations & maintenance of electro-mechanical works, recorded higher turnover of AED 154.870 million and profit of AED 24.863 million for the year ended 31st December, 2013 as compared to turnover and profit of AED 136.116 million and AED 24.560 million, respectively in the previous year.

43. Olayan Voltas Contracting Company Limited (OVCL), incorporated on 8th February, 2012, is a joint venture company engaged in the business of electro-mechanical projects in the Kingdom of Saudi Arabia. OVCL has recorded turnover of Saudi Riyal (SR) 102.632 million and profit of SR 9.707 million for the year ended 31st December, 2013 as compared to turnover of SR 130.861 million and profit of SR 11.667 million for the period ended 31st December, 2012.

44. Voltas Qatar WLL (VQ), a joint venture company incorporated on 2nd April, 2012, is engaged in the business of undertaking EPC works for MEP contracts in the State of Qatar. VQ has recorded turnover of Qatari Riyal (QR) 94.677 million and profit of QR 5.363 million for the year ended 31st December, 2013 as compared to turnover of QR 22.887 million and loss of QR 0.244 million for the period ended 31st December, 2012.

45. During the year under review, the Company entered into a joint venture agreement with DOW Chemical Pacifc (Singapore) Private Limited for establishing a joint venture company to tap the growing Water and Waste Water treatment market in the country. The proposed new company, Voltas Water Solutions Private Limited, will have equal capital contribution from Voltas and DOW.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

46. Information pursuant to Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, relating to conservation of energy and technology absorption is given by way of an Annexure to this Report. As for information in respect of foreign exchange earnings and outgo, the same has been given in the notes forming part of the accounts for the year ended 31st March, 2014.

DIRECTORS'' RESPONSIBILITY STATEMENT

47. Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors, based on the representations received from the Operating Management, confirm that:

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

(b) they have, in the selection of the accounting policies, consulted the Statutory Auditors and have applied their recommendations consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of afairs of the Company at the end of the financial year and of the profit of the Company for that period;

(c) they have taken proper and sufficient care to the best of their knowledge and ability, for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) they have prepared the annual accounts on a going concern basis.

CORPORATE GOVERNANCE

48. Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, Management Discussion and Analysis, Corporate Governance Report and Auditors'' Certificate regarding compliance of conditions of Corporate Governance form part of the Annual Report. A declaration signed by the Managing Director in regard to compliance with the Code of Conduct by the Board Members and Senior Management personnel also forms part of the Annual Report.

DIRECTORATE

49. In accordance with the provisions of the Companies Act, 2013 and the Company''s Articles of Association, Mr. Ishaat Hussain and Mr. Sanjay Johri retire by rotation and being eligible, offer themselves for re-appointment.

INDEPENDENT DIRECTORS

50. Mr. S N Menon, due to his indifferent health, stepped down as an Independent Director of the Company with effect from 19th March, 2014. Accordingly, he also ceased to be a Member of the Board Remuneration Committee. The Directors place on record their sincere appreciation of the valuable advice given by Mr S N Menon during his tenure on the Board/Committee and wish him speedy recovery.

51. In line with the requirements of the Companies Act, 2013, Mr. Nani Javeri and Mr. R N Mukhija, satisfy the criteria of independence under Section 149(6) of the Act and are being appointed as Independent Directors, to hold office as per the tenure mentioned in the Notice of the ensuing Annual General Meeting (AGM) of the Company. At the same time, Mr. Nasser Munjee, has decided to step down with effect from 31st August, 2014 to comply with the requirements of SEBI, which limits directorship in seven listed companies only.

52. Mr. Debendranath Sarangi and Mr. Bahram N Vakil are proposed to be appointed as Independent Directors for a term of 5 years each and the approvals of the shareholders are being sought at the ensuing AGM of the Company. Attention of the Members is drawn to Resolution No. 8 and No.9 of the AGM Notice and its related Explanatory Statements.

AUDITORS

53. At the Annual General Meeting, members will be required to appoint Statutory Auditors of the Company. Messrs Deloitte Haskins & Sells, the present Auditors of the Company have pursuant to Section 139 of the Companies Act, 2013, furnished a certificate regarding their eligibility for reappointment. The approval of the members is also being sought for their appointment as the Branch Auditors of the Company. Attention of the members is invited to Item No. 5 of the Notice of the Annual General Meeting and the relevant Explanatory Statement.

GENERAL

54. The Notes forming part of the Accounts are self-explanatory or to the extent necessary, have been dealt with in the preceding paragraphs of the Report.

On behalf of the Board of Directors

ISHAAT HUSSAIN

Chairman


Mar 31, 2013

To the Members

The Directors present their Fifty-Ninth Annual Report and the Audited Statement of Accounts for the year ended 31st March, 2013.

FINANCIAL RESULTS

Rs.in Crores

Standalone Consolidated 2012-13 2011-12 2012-13 2011-12

2. Revenue from Operations (Gross) 5618 5203 5584* 5219*

Profit for the year after meeting all expenses but before interest, depreciation and exceptional items 290 413 335 435

Interest 34 26 39 31

Depreciation and amortisation 22 29 28 34

Profit before exceptional items 234 358 268 370

Exceptional items 8 (151) 12 (151)

Profit before tax 242 207 280 219

Provision for taxation 62 55 73 57

Profit after tax 180 152 207 162

Minority Interest and Share of (Profit)/Loss of Associate - - 1 -

Profit after Minority Interest and Share of (Profit)/Loss of Associate 180 152 208 162

Adding thereto:

- Balance brought forward from the previous year 159 89 225 139

- Foreign Exchange Translation Difference - - (3) 7

- Reserves and Surplus transferred on divestment of a subsidiary - - 8 -

Profit available for appropriations 339 241 438 308

Appropriations:

- General Reserve 20 20 22 20

- Proposed Dividend 53 53 53 53

- Tax on Dividend 9 9 9 9

- Legal and Special Reserve - - 1 1

Leaving a balance to be carried forward 257 159 353 225

* Consolidated turnover is after eliminating inter-company purchase/sales transactions.

DIVIDEND

3. The Company''s dividend policy is based on the need to balance the twin objectives of appropriately rewarding the shareholders with dividend and of conserving resources to meet the Company''s future needs. Taking into consideration the performance of the Company, the Directors recommend a dividend of Rs. 1.60 per equity share of Rs. 1 each (160%) for the year 2012-13 (2011-12: 160%).

OPERATIONS

4. In terms of both domestic and global economic growth, momentum was slower than anticipated. The much- awaited economic recovery was delayed, with an extensive bottoming-out phase. The Indian Rupee sank to new lows due to excessive volatility in exchange rates. Although there was some respite, interest rates and inflation continued to pose serious challenges for major parts of the year. Capital investments in Projects in India were at levels as low as at the year 2004, according to some reports. The pace of execution also posed enormous challenges, leading to cost overruns and margin dilution in projects. Dampened sentiment impacted consumer behaviour, with the Room AC industry reporting a de-growth. Despite an overall depressed environment, the Consolidated Sales and Income from Operations for the financial year 2012-13 was higher by 7% at Rs. 5584 crores compared to Rs. 5219 crores in the previous year. Consolidated Profit after Tax and Minority Interest was also higher by 28% at Rs. 208 crores, as against Rs. 162 crores, last year.

5. The performance of electro-mechanical projects business, both in international and domestic geographies, was below par, also symptomatic of the endemic downtrend in the Projects industry. Execution of projects has been plagued by elongated schedules and delayed clearances. These problems were especially severe in the Company''s project for the Sidra Medical & Research Centre, under execution at Qatar. Revenue from variations is foreseen, and will be accounted in subsequent periods based on their realization. Nevertheless, the Company continues to deal objectively with the challenges faced, and frame a longer-term business strategy for future growth opportunities.

6. Similar adversity was faced by the Domestic Projects business, coupled with delayed payments, putting strain on working capital and cash flows. Several mitigation efforts are under way, including measures laid down in the previous year to reduce operational and administrative costs. The business has also adopted various IT initiatives and process changes to curb the dilution of margins that is now endemic across the Projects Industry landscape.

7. The Domestic Projects business continues its endeavour to extract synergies from the Water business and Rohini Industrial Electricals Limited (RIEL), under the integrated banner of the Domestic Projects Group (DPG). There have, however, been a number of challenges. The low-margin ''legacy'' orders have again impacted RIEL''s performance. The Management has conservatively written down the value of investment in this business to the extent of Rs. 17 crores. Nevertheless, the business continues to aggressively pursue profitable orders in its consolidated DPG identity.

8. The consolidated order book for the Projects Business stands at Rs. 3719 crores, yielding healthy visibility for the coming year.

9. The Engineering Products business too suffered its fair share of challenges. Most severe of all has been the ongoing ban on mining activities in several States in India, which deeply cut into the Mining & Construction Equipment business. Such problems have added impetus to the business'' efforts to seek greener pastures overseas. By leveraging its existing client relationships, the business has been successful in converting opportunities arising from overseas pursuits of existing customers. The ongoing Mozambique venture continues to be lucrative, providing a natural hedge against domestic setbacks. Strategically, the Company is investing substantially in expanding and reinforcing its credentials in product support, as well as its Operations & Maintenance capability.

10. The textile industry in India suffered the ill-effects of highly volatile cotton prices, combined with high inflation and interest rates, severe power shortages in South India and of course, the depressed global market. However, in the last few months of the year, the industry showed signs of revival, thanks to rising global and national demand for loom, coupled with the prospect of investment-friendly Governmental policy initiatives. Overall, the Textile Machinery business was well able to sustain its performance and even strengthen its presence in non-spinning segments.

11. In the Unitary Cooling business, the Company enjoyed the No.1 market position for most of the year, attributable largely to brand development and communications based on extensive market research. Along with substantial growth in both volume and market share of Room ACs, the business has benefited from better traction in Commercial Refrigeration products through sizable OEM orders. Growth in the Unitary Cooling business was achieved in the face of markedly more intense competition, as well as unfavourable climatic conditions and poor consumer sentiment. These factors did take a toll on the industry overall, which suffered aggregated sales volume de-growth of around 5%, according to GFK Report.

12. As part of its strategy to focus on core competencies, the Company has, during the year under review, hived off its subsidiary, Simto Investment Company Limited. In view of the transfer of the Materials Handling business to a JV with Kion in the previous year, the Company divested its investment in the JV to the Kion Group, thus exiting the business entirely.

FINANCE

13. Inflation rates remained high, due to the Government''s inability to contain supply side issues and boost production, coupled with the continuing high level of global commodity prices (especially in crude, which forms a major portion of India''s import basket). Further, the large twin deficits - fiscal and current account - posed significant risks to both growth and macro-economic stability, as high deficit and borrowings have a direct bearing on inflation. Accordingly, the Central bank maintained its stance of ensuring tight liquidity conditions. The Domestic Projects business faced the brunt of the resultant tight liquidity, in terms of delays in payments and the increasing numbers of ''days receivables''. However, the Consumer Durables business kept itself largely insulated from this downtrend, thanks to its cash-and-carry model and diligence on credit.

14. The operating geographies of the International Projects business also remained under the grip of recession, causing widespread delays in collections of dues. Nevertheless, there could be no stoppage in the deployment of resources for on-going projects, including the Sidra project at Qatar and other large projects in UAE, thus putting a significant strain on the Company''s finances.

15. With the help of timely mobilization of idle non-core assets, the Management has suitably managed the cash situation, with a satisfactory liquidity position comprising liquid investments of Rs. 318 crores. With WPI inflation at 3-year lows, and the RBI cutting interest rates, it is hoped that the economic situation has completed its ''bottoming-out'' phase, with growth to follow. The Management continues to focus regularly on its cash flow including inventory and receivables. The surplus funds are invested in low risk Debt Mutual Funds and monitored regularly by the Investment Committee of the Board to maximize returns with minimal risk.

TATA BUSINESS EXCELLENCE MODEL (TBEM)

16. In line with the decision taken at the Group level in respect of TBEM assessments, the Company is focusing on carrying out relevant integration activities and findings of past TBEM assessments are being reviewed. The intention is to participate in the TBEM External Assessments in a unified manner i.e. at Company level and not at individual Business Unit level, as hitherto in the past. In addition, the Company has undertaken several ''Continual Improvement Projects'' with the objective of improving operational efficiencies in areas critical to the respective Business Units/Functions. The Company''s unified participation is proposed for the Group Level External Assessment to be held in the next financial year.

17. To support its Business Excellence journey, the Company continues to develop a pool of trained TBEM assessors, and also provides trained assessors for the Group-level TBEM Assessment Process. The Company currently has over 70 TBEM Champions, of whom more than 30 are certified in the most up-to-date TBEM Criteria. During the year, 13 assessors participated in the Group level TBEM assessments and their contribution won the formal recognition at the Group-level Business Excellence Convention held in December 2012.

IT INITIATIVES

18. The Management continued its drive to improve organizational efficiency and productivity by developing appropriate IT-based solutions. During the year, the focus was on automation of business processes, including Project Accounting, Payroll, HR and Customer Relationship Management (CRM).

19. The Project Result Analysis process for Domestic Projects has yielded benefits in terms of better control over project costs, revenue and profitability. The integration of Payroll with the Human Capital Management (HCM) system for overseas employees helped in seamless payroll processing. CRM software was further refined for Unitary Products business, with expectations of quicker closure of dealer and franchisee payments and better customer service.

20. Due to increased emphasis on Compliance and Risk Mitigation, all SAP roles were redesigned and users were properly authorized through SAP''s Governance & Risk Compliance (GRC) Access Control tool. This has minimized the risks and conflicts within the SAP environment, with a suitable strategy for control and mitigation for each conflict identified.

21. In view of critical role of IT in all operations, many improvements were carried out to increase performance, reliability and security of underlying systems. These included: redesign and redeployment of the Disaster Recovery system for all crucial servers; clean-up of Master Data for Customers and Vendors; putting in place new policies and processes for network and end-user security and deployment of IDEA, a software tool to assist the Internal Audit Department for data analysis.

COMMUNITY DEVELOPMENT

22. Contribution to Society is one of the core values of the Company. The Company is continuously reviewing its efforts towards improving the quality of life of the communities it serves through both its Employability Programme and its endeavours in volunteering. During the year under review, employees devoted their time, energy and talent in the service of the less privileged. Volunteers visited homes for the aged, conducted income generation programmes for the differently-abled, mentored less privileged children, held blood donation camps and increased environmental awareness.

23. As a part of its Employability Programme, the Company continues to extend its Core Competency in Air Conditioning and Refrigeration (AC&R) to less privileged youth, primarily drop-outs from formal education who are ill-equipped to secure a sustainable livelihood. The desired outcome is to make the recipient self-reliant and employable, with technical capabilities attested by end-of-course certificates. Soft-skills training programs are also conducted for these youngsters, such as spoken English, customer interaction, personality development, communication skills, time management, value education and goal setting.

24. The course designed for them includes on-the-job- training, assessment and placement support. For Employability Programme, the Company is associated with: The Joseph Cardijn Technical School and Bosco Boys Home (Mumbai), GMR Varalakshmi Foundation (Hyderabad, Bangalore and Delhi), GTTI (Kolkata and Bhubaneswar), ITI (Delhi) and Kumaran ITI (Chennai). Recently, the Company partnered with The Indian Hotels Company Limited, which has set up a comprehensive Centre of Excellence for skills development at the Lonavala ITI in Maharashtra, where short-term vocational training courses are conducted and the Company will offer its course in AC&R for disadvantaged youth from surrounding rural areas.

25. The Company also embraces the Tata Group''s commitment to social equity and supports the Group''s Affirmative Action programme, which is based on the four pillars of Employment, Employability, Entrepreneurship and Aid in Education. The Company promotes ''Supplier Diversity'' through its vendor development initiatives for outsourcing products/services, through the Dalit India Chamber of Commerce and Industry. The Company also extends aid to the Kathkari tribal children studying at the Bethany School run by the Bethany Society in Panvel, Maharashtra, in the form of reimbursing the salary of a special English instructor, and providing mid-day meals for the children. In addition, volunteers of the Company have sponsored the education of six children of the Kathkari tribe.

26. The Voltas Organization of Women (VOW) is a Public Charitable Trust founded in 1965. VOW is exclusively run by women and its membership consists of women employees of Voltas and spouses of male employees. VOW supports several causes such as subsidizing the medical and basic education costs of the economically distressed, and raising awareness on issues concerning women.

GLOBAL COMPACT AND CARBON DISCLOSURE PROJECT

27. The Company is a signatory to the UN Global Compact and continues its commitment to adhere to the principles of the Global Compact. The Communication on Progress (COP) for the financial year 2012-13 has been uploaded along with the Letter of Support, on the Global Compact website.

ENVIRONMENT AND SAFETY

28. The Company continues to strive to address matters related to Safety, Health and Environment (S-H-E) through a variety of initiatives. In keeping with its vision of ''Engineering Solutions for a Greener Tomorrow'', the Company pursues the development of eco-friendly products and appropriate engineering solutions. Other environment-related initiatives include discharge of effluents, recycling of waste water, disposal of solid and hazardous waste, rain water harvesting, vermiculture, use of solar energy for water heating and use of environment-friendly refrigerants. The manufacturing plant at Pantnagar as well as overseas Projects have been certified to OHSAS standards and work is under way to secure OHSAS certification for other facilities of the Company. The manufacturing facilities at Pantnagar and Thane are also certified to ISO 14001 standards. In order to give further impetus, a Board-level Committee was constituted to oversee and lend direction in respect of S-H-E matters. Health-related initiatives include organizing yoga camps and conducting medical checkups for employees.

29. The Company proposes to undertake a host of other initiatives including Carbon Footprint Assessment, Safety Audits and numerous measures to foster employee health and well-being. The Company has also tied up with a professional e-waste Management company to address the critical disposal challenge.

STATEMENT OF EMPLOYEES'' PARTICULARS

30. The information required under Section 217(2A) of the Companies Act, 1956 and the Rules made thereunder, is provided in an Annexure forming part of this Report. In terms of Section 219(1)(b)(iv) of the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary.

APPOINTMENT OF COST AUDITOR

31. The Central Government has approved the appointment of M/s. Sagar & Associates, Cost Auditors, for conducting cost audit for the year ended 31st March, 2013.

32. The due date for filing the Cost Audit Report with the Ministry of Corporate Affairs for the year ended 31st March, 2012 was 28th February, 2013 and the Cost Audit Report was filed by the Cost Auditors on 30th January, 2013. The due date for filing the Cost Audit Report for the year ended 31st March, 2013 is 30th September, 2013.

SUBSIDIARIES AND JOINT VENTURES

33. Pursuant to the Accounting Standard AS-21 issued by the Institute of Chartered Accountants of India, Consolidated Financial Statements presented by the Company include the financial information of subsidiary companies. The Central Government has by General Circular No. 2/2011 dated 8th February, 2011, granted general exemption to companies from attaching the accounts of subsidiary companies, subject to certain conditions. As the Company has complied with all the conditions, the annual accounts and other documents of the subsidiary companies are not attached with the Balance Sheet of the Company. Details of capital, reserves, total assets, total liabilities, turnover/income, etc., of the subsidiaries form part of the Consolidated Financial Statements. The Annual Accounts of the subsidiary companies are open for inspection by any member/investor and also available on the website of the Company - www.voltas.com. The Company will make the documents/details available, upon request by any member of the Company or its subsidiaries interested in obtaining the same.

34. Despite the on-going economic slow down, especially in the Middle East region, many of the Company''s overseas subsidiaries/joint ventures (JVs) performed better in the financial year 2012-13 as compared to last year. The financial performance and other details of operating subsidiaries/joint venture companies are given below:

35. Weathermaker Limited (WML), engaged in the business of manufacturing galvanized iron, aluminium, black mild steel, stainless steel ducts and other speciality air distribution products is a wholly-owned subsidiary of the Company and has its manufacturing facility in Jebel Ali Free Zone, UAE. WML has reported higher turnover of AED 29.527 million and profit of AED 2.616 million for the year ended 31st December, 2012 as compared to turnover of AED 28.638 million and profit of AED 2.086 million in the previous year.

36. Saudi Ensas Company for Engineering Services WLL (Saudi Ensas), a wholly-owned subsidiary of the Company in Jeddah, Kingdom of Saudi Arabia (KSA) is engaged in execution and operations/maintenance of electro-mechanical installations in KSA. Saudi Ensas has recorded higher turnover of SR 14.896 million and net profit of SR 0.243 million for the year ended 31st December, 2012 as compared to turnover of SR 4.218 million and net loss of SR 2.124 million in the previous year.

37. Voltas Oman LLC, a subsidiary of the Company (65% shareholding of Voltas), is engaged in undertaking Engineering, Procurement and Construction (EPC) works for electro-mechanical projects in Sultanate of Oman. Voltas Oman LLC commenced execution of projects during the financial year ended 31st December, 2012 and reported turnover of Omani Rial (RO) 0.698 million and net loss of RO 0.178 million.

38. Lalbuksh Voltas Engineering Services & Trading LLC (Lalvol), a subsidiary of the Company (60% shareholding), is engaged in the business of Water Well Drilling, Water Management and Landscaping in Oman. Lalvol recorded turnover of RO 3.577 million and net profit of RO 0.021 million for the year ended 31st December, 2012 as compared to turnover of RO 3.359 million and net profit of RO 0.278 million in the previous year.

39. Universal Voltas LLC, Abu Dhabi, a joint venture company engaged in the business of electro-mechanical projects and operations & maintenance of electro-mechanical works, recorded higher turnover of AED 136.116 million and Profit of AED 24.559 million for the year ended 31st December, 2012 as compared to turnover and profit of AED 134.635 million and AED 37.043 million, respectively in the previous year.

40. Universal Weathermaker Factory LLC (UWF), a joint venture company incorporated in Abu Dhabi, is engaged in the manufacture and sale of air conditioning ducts and other related fixtures. UWF reported lower turnover and profit of AED 16.682 million and AED 0.531 million, respectively for the year ended 31st December, 2012 as compared to turnover of AED 20.065 million and profit of AED 0.667 million in the previous year.

41. Olayan Voltas Contracting Company Limited (OVCL), incorporated on 8th February, 2012, is a new joint venture company engaged in the business of electro-mechanical projects in Kingdom of Saudi Arabia. In its first year of operations, OVCL has recorded turnover of Saudi Riyal (SR) 130.861 million and profit of SR 11.667 million.

42. Voltas Qatar WLL (VQ), a new joint venture company incorporated on 2nd April, 2012, is engaged in the business of undertaking EPC works for the MEP contracts in the State of Qatar. VQ has recorded revenue of Qatari Riyal (QR) 22.887 million in the first year of its operations between 2nd April, 2012 and 31st December, 2012. However, due to initial registration fees, licences and professional fees, loss of QR 0.244 million was reported for the period under review.

43. Universal Comfort Products Limited (UCPL), a wholly- owned subsidiary of the Company, engaged in the business of manufacturing air conditioners, recorded higher turnover of Rs. 740 crores for the year ended 31st March, 2013 as compared to Rs. 486 crores in the previous year. However, due to higher incidence of tax (30% exemption as compared to 100% in the previous year), net profit was Rs. 32 crores for the year under review as compared to Rs. 34 crores in the previous year.

44. Rohini Industrial Electricals Limited (RIEL) is engaged in undertaking turnkey electrical and instrumentation projects for industrial and commercial sectors. RIEL has reported lower turnover of Rs. 81 crores and loss of Rs. 13 crores for the year ended 31st March, 2013 as compared to turnover of Rs. 117 crores and loss of Rs. 26 crores in the previous year.

45. During the year under review, the Company had transferred its entire shareholding in Simto Investment Company Limited (Simto) in favour of Tata Investment Corporation Limited with effect from 31st August, 2012. Accordingly, Simto ceased to be a subsidiary of the Company. Voice Antilles N.V. was closed and liquidated effective 14th September, 2012. The legal process for voluntary liquidation of Voice Antilles N.V. in Willemstad, Curacao (erstwhile Netherlands Antilles) has been completed. The entire equity shareholding (34%) in Voltas Material Handling Private Limited (VMHPL) was transferred on 2nd November, 2012 in favour of Linde Material Handling Asia Pacific Pte Limited, Singapore, an affiliate of KION Group and existing shareholder with balance 66% equity shareholding of VMHPL.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

46. Information pursuant to Section 217(1 )(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, relating to conservation of energy and technology absorption is given by way of an Annexure to this Report. As for information in respect of foreign exchange earnings and outgo, the same has been given in the notes forming part of the accounts for the year ended 31st March, 2013.

DIRECTORS'' RESPONSIBILITY STATEMENT

47. Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors, based on the representations received from the Operating Management, confirm that:

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

(b) they have, in the selection of the accounting policies, consulted the Statutory Auditors and have applied their recommendations consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

(c) they have taken proper and sufficient care to the best of their knowledge and ability, for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) they have prepared the annual accounts on a going concern basis.

CORPORATE GOVERNANCE

48. Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, Management Discussion and Analysis, Corporate Governance Report and Auditors'' Certificate regarding compliance of conditions of Corporate Governance form part of the Annual Report. A declaration signed by the Managing Director in regard to compliance with the Code of Conduct by the Board Members and Senior Management personnel also forms part of the Annual Report.

DIRECTORATE

49. The Directors report with regret, the sad demise of Mr. Jimmy Bilimoria, who passed away on 3rd May, 2013. Mr. Bilimoria was an Independent Director of the Company since 22nd September, 2008 and also a member of the Board Audit Committee and Chairman of the Investment Committee. Mr. Bilimoria was appointed as the Chairman of the Audit Committee on 9th August, 2010, which position he held till 25th March, 2013. Thereafter, he continued as a member of the Board Audit Committee. Mr. Bilimoria''s financial acumen, mature advice and constructive approach were of great assistance to the Company and the Directors place on record their appreciation of the valuable advice given by Mr. Bilimoria during his tenure on the Board/Committees.

50. In accordance with the provisions of the Companies Act, 1956 and the Company''s Articles of Association, Mr. Nasser Munjee, Mr. Nani Javeri and Mr. N. N. Tata retire by rotation and being eligible, offer themselves for re-appointment.

51. Mr. Thomas Mathew T. was appointed as an Additional Director by the Board of Directors on 10th January, 2013, representing Life Insurance Corporation of India. In accordance with the provisions of the Companies Act, 1956, Mr. Thomas Mathew T. holds office upto the date of the forthcoming Annual General Meeting and Notice under Section 257 of the Act has been received from a member proposing his appointment as Director of the Company. The Resolution seeking approval of the members for appointment of Mr. Thomas Mathew T. as a Director of the Company has been incorporated in the Notice of the forthcoming Annual General Meeting.

AUDITORS

52. At the Annual General Meeting, members will be required to appoint Auditors for the current year. Messrs Deloitte Haskins & Sells, the present Auditors of the Company have pursuant to Section 224(1) of the Companies Act, 1956, furnished a certificate regarding their eligibility for reappointment. The approval of the members is also being sought for their appointment as the Branch Auditors of the Company. Attention of the members is invited to Item No.7 of the Notice of the Annual General Meeting and the relevant Explanatory Statement.

GENERAL

53. The Notes forming part of the Accounts are self-explanatory or to the extent necessary, have been dealt with in the preceding paragraphs of the Report.

On behalf of the Board of Directors

ISHAAT HUSSAIN

Chairman

Mumbai, 20th May, 2013


Mar 31, 2012

The Directors present their Fifty-Eighth Annual Report and the Audited Statement of Accounts for the year ended 31st March, 2012.

FINANCIAL RESULTS

Rs.in Crores Stand-alone Consolidated

2011-12 2010-11 2011-12 2010-11

2. Revenue from Operations 5203 5183 5219 5226 Profit for the year after meeting all expenses but before interest, depreciation and exceptional items 413 507 435 521

Interest 26 13 31 16

Depreciation and amortisation 29 16 34 21

Profit before exceptional items 358 478 370 484

Exceptional items (151) 45 (151) 40

Profit before tax 207 523 219 524

Provision for taxation 55 169 57 172

Profit after tax 152 354 162 352

Minority Interest and Share of (Profit)/Loss of Associate — — — 5

Profit after Minority Interest and Share of (Profit)/Loss of Associate 152 354 162 357 Adding thereto:

- Balance brought forward from the previous year 89 82 139 125

- Foreign Exchange Translation Difference — — 7 1

- Reserves and Surplus of a subsidiary transferred on liquidation — — — 5 Profit available for appropriations 241 436 308 488 Appropriations:

- General Reserve 20 270 20 271

- Proposed Dividend 53 66 53 66

- Tax on Dividend 9 11 9 11

- Legal and Special Reserve — — 1 1 Leaving a balance to be carried forward 159 89 225 139

3

DIVIDEND

3. The Company's dividend policy is based on the need to balance the twin objectives of appropriately rewarding the shareholders with dividend and of conserving resources to meet the Company's future needs. Taking into consideration the performance of the Company, the Directors recommend a dividend of Rs. 1.60 per equity share of Rs. 1 each (160%) for the year 2011-12 (2010-11: 200%).

OPERATIONS

4. The global economic crisis continues to adversely impact all aspects of business and the economy. Volatile exchange, high interest rates and inflation continued to be an enormous challenge. This has resulted in the deferment of capital investment apart from creating a slowdown in business activity, also evidenced by the continuously declining IIP numbers. In view of this difficult situation, the Company's consolidated Sales and Income from Operations were marginally lower at Rs. 5219 crores, as compared to Rs. 5226 crores last year. Profit after Tax, Minority Interest was Rs. 162 crores, as against Rs. 357 crores in the previous year, primarily due to the recognition of expected cost overruns caused by an Onerous international contract.

5. The performance of the Electro Mechanical business and in particular, the International Projects Business were impacted due to the Sidra Medical & Research Centre project under execution at Qatar. This is a large and prestigious, state-of-the-art hospital with world-class facilities with a total investment of approx. USD 2.5 billion and has been in execution since 2008. The Company's share of work is valued in excess of Rs. 1000 crores and involves extensive coordination with multiple agencies and intermediaries. The design and build nature and complexity of the project, combined with the Client's quest for attaining truly global standards has had an impact on various cost parameters. In addition to elongated project schedules and lapsed time, there have also been numerous difficulties and complications including the non-availability of Indian Workmen visas. The Company has in line with AS-7 accounted for the estimated cost of the project. These estimates have been finalized after an extensive techno commercial review by the Management taking cognizance of cost incurred and to be incurred, to complete the project on time, aggregating Rs. 277 crores. The same has been reflected as Onerous Contract under Exceptional Items excluding Rs. 44 crores cost overrun accounted under 'Cost of jobs'. Additional revenue claims will be recognized subsequently as per the accounting standard requirement, once they are crystallized and there is greater clarity about the final outcome.

6. The Domestic Projects Business has performed comparatively well, despite the difficult economic conditions. However, managing cost and cash flow continues to be a challenge and there has been a slower pace of project movement combined with delayed payments leading to higher outstandings. As part of mitigation efforts, the Company has put in place various measures to reduce operational and administrative costs.

7. In addition, the Domestic Projects business has also been reorganized to comprehensively extract multiple synergies as well as offering a one-window solution to the Customer. Consequently, the Water Business and Rohini Industrial Electricals Limited (RIEL) has been integrated with the Domestic Electro Mechanical business. The performance of RIEL has been impacted largely owing to the proportion of 'legacy' orders with poor margins. The Company is making a concerted effort to develop new business while reducing its fixed costs, to become more competitive and profitable in times to come.

8. The consolidated order backlog for the entire Electro Mechanical business stands at Rs. 4292 crores and gives a healthy visibility for the coming year.

9. In view of transfer of Materials Handling business to a Joint Venture with Kion, the figures for the Engineering Products and Services for the period under review are not directly comparable with the previous year. The Mining and Construction business has been impacted by high interest rates and the poor pace of environmental clearance for mining activities. Global industry consolidation and takeover of the mining businesses of the Company's erstwhile major Principals (Bucyrus and Le-tourneau by Caterpillar and Joy, respectively) have affected the Engineering Products and Services business. While Voltas continues to retain some maintenance contracts, Caterpillar has transferred part of its India business to its own dealers. Service agreements with Joy/P&H India are currently under discussion. In the meantime, business management is making a determined effort to manage costs and take advantage of each growth opportunity.

10. The Textile Machinery business has performed well, achieving growth on the back of a sizeable order book built earlier. New investments in the Textile industry are however lagging given the poor sentiment, cyclical nature and pollution based environment issues being encountered.

11. In spite of intense competition, unfavorable climatic conditions and poor consumer sentiment, Voltas has successfully maintained its No. 2 market position in the Unitary Cooling business nationally. At the same time, it has held onto its No. 1 position in the important market of Northern India and is making inroads in other regions as well. The industry as a whole has suffered aggregated sales volume de-growth of around 20% during the year under review. Voltas however contained the volume shortfall and has managed to do comparatively well on the back of mix and pricing corrections. The Company continued its focus on Tier-II and Tier-III towns and the thrust in commercial refrigeration products has also yielded growth over the period.

12. Over the year, the Company has also undertaken extensive market research, the findings of which were used to revitalize the Voltas Brand communication.

FINANCE

13. Liquidity in the domestic markets remained tight throughout the year on account of high inflation and periodic increases in Repo and Reverse Repo rates by Reserve Bank of India. In the Domestic Projects business, the high cost of capital resulted in delayed payments and consequently, higher number of days receivables. This was partly compensated by an increase in Trade payables to manage the cash flows of the business. The unpredictable weather and de-growth of the Consumer Durables business led to high levels of inventory for the major part of the year as compared to the past, resulting in increased capital employed.

14. The international markets were also under stress in 2011-12. During the year under review, deployment of

significant resources, combined with a delay in execution of a large design and build project at Qatar caused a significant strain on the Company's finances. A part of surplus funds had to be liquidated to fund the cost overruns at Sidra while delays in settlements of some large projects also affected the capital employed by the international projects business. The above factors led to a negative cash flow from Operating activities in the current year.

15. Despite the above, the liquidity position of the Company was satisfactory with liquid investments of Rs. 221 crores. Borrowings at a consolidated level of Rs. 225 crores were mainly on account of certain project specific overseas requirements.

16. The Interest Rate scenario in India is at a peak and expected to taper down in a gradual manner. The Management continues to focus regularly on its cash flow including inventory and receivables. The surplus funds are invested in Debt Mutual Funds and monitored regularly by the Investment Committee of the Board to maximize returns with minimal risk.

TATA BUSINESS EXCELLENCE MODEL (TBEM)

17. In its Business Excellence Journey, the Company continued its focus on carrying out assessments, to identify areas for improving the operational efficiencies. Accordingly, External Assessments at the Tata Group level were carried out by teams of qualified assessors in respect of Unitary Cooling Products business and Engineering Projects business (comprising Mining & Construction Equipment business, Textile Machinery business and the manufacturing operations of Materials Handling business). The performance of Unitary Cooling Products business was rated as "Emerging Industry Leader" and Engineering Products business was rated as"Good Performance", based on the findings of the assessments.

18. The Company has developed a pool of trained TBEM Assessors to support these Business Excellence initiatives and also to provide External Assessors at the Group level. Further, various initiatives to strengthen quality, namely Process Management, Process Improvement, Total Quality Management at the manufacturing plants and other improvement initiatives are under way on a continuous basis.

IT INITIATIVES

19. The Company continued to invest in developing IT-based solutions that would support improvements in organisational efficiency.

20. During the year under review, the Company moved its entire collaboration platform to Google Cloud. This has enabled all employees to access the e-mails from any location and any device, at any time. Additionally, all the advanced features- such as voice and video communication, document- sharing and web conferencing - have been made available to all employees, thereby improving their productivity.

21. IT also enabled compliance monitoring by implementing (a) tracking tool for legal cases (b) SAP authorization control through a Governance cum Risk management compliance tool and (c) assets-tracking tool for license compliance.

COMMUNITY DEVELOPMENT

22. The Company shares the Tata Group's commitment for developing a strong self-reliant community as part of its business process. Through its Core Competency program, the Company extended its technical skills in Air conditioning and Refrigeration to under-privileged youth, supplemented with soft-skills training, to help them build sustainable livelihoods. It also helped in expanding the pool of young employable talent and expertise for the benefit of both society and business. The Core Competency projects were pursued in alliance with Joseph Cardin Technical School and Bosco Boys Home in Mumbai, as well as GMR Varalakshmi Foundation in Hyderabad. In addition, there were several community initiatives driven by volunteer activity, with a focus on mentoring orphans and underprivileged children, community service for the aged and the physically/mentally challenged, income generation schemes and blood donation camps.

23. The Company supports the national endeavour to bring about equality of opportunity for the socially and economically disadvantaged SC/ST communities, through its Affirmative Action (AA) Policy. The Company has re-constituted its Cross Functional Team on AA, and reviewed its engagement in the Tata Group's four initiative areas of Employment, Employability, Entrepreneurship and Aid in Education. The Company has enhanced the representation of SC/ST in recruitment at all levels, and expanded the pool of employable personnel from SC/ST through mass skills up-gradation endeavours. As part of Aid-in-Education, the Company gives scholarships to certain deserving SC/ST students pursuing Engineering courses. The Company plans to promote 'Supplier Diversity' by developing vendors for products/services through the Dalit India Chamber of Commerce and Industry (DICCI).

24. The Voltas Organization of Women (VOW) is a Public Charitable Trust founded in 1965 and registered in 1975. VOW's membership and leadership is exclusively drawn from the Company's women employees and spouses of male employees. VOW assists the needy people in the fields of health and education, conducts programmes on atrocities and domestic violence against women, and is active in issues concerning tribal women through its various partners. In 2011-12, VOW supported the Bethany Society towards formation of Self-Help Groups for Women whose members are active in Gram Sabhas and income generation programs. VOW also supported the Shanti Avedna Sadan for terminally ill cancer patients and the Snehalaya Charitable Trust for vocational training for the mentally and physically challenged, besides giving medical relief to the very poor and needy.

GLOBAL COMPACT AND CARBON DISCLOSURE PROJECT

25. The Company is a signatory to the UN Global Compact and continues its commitment to adhere to the principles of the Global Compact. The Communication on Progress (COP) for 2011-12 has been uploaded along with the Letter of Support on the Global Compact Site. The COP communicates publicly to the stakeholders on progress made in implementing the Global Compact's ten principles.

ENVIRONMENT AND SAFETY

26. In its endeavour to address environment related matters, the Company continues to strengthen its Processes and Action Plans based on related studies carried out earlier. In addition, the Company continues to develop eco-friendly products and appropriate Engineering Solutions. The Company's Vision Statement "Engineering Solutions for a Greener Tomorrow" aims to guide and motivate all the endeavours keeping in mind the environmental concerns.

27. The Overseas Projects business and the manufacturing plant of Unitary Cooling Products business at Pantnagar have been awarded with OHSAS 18001 certification for health and safety. The Company's Plants at Pantnagar and Thane have been awarded ISO 14001 certification.

STATEMENT OF EMPLOYEES' PARTICULARS

28. The information required under Section 217(2A) of the Companies Act, 1956 and the Rules made there under, is provided in an Annexure forming part of this Report. In terms of Section 219(1)(b)(iv) of the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary.

APPOINTMENT OF COST AUDITOR

29. As per the directions given by the Central Government, the Company has, based on an application made, received the Government's approval for re-appointment of M/s. Sagar & Associates, a firm of Cost Accountants as the Cost Auditor of the Company for the year ended 31st March, 2012 in respect of refrigeration products manufactured by the Company. The Cost Audit Report of M/s. Sagar & Associates, in respect of refrigeration products for the year ended 31st March, 2011 was filed with the Central Government on 2nd September, 2011 well within the due date (27th September, 2011).

30. Pursuant to the Order dated 24th January, 2012 passed by the Ministry of Corporate Affairs (MCA), Cost Audit Branch, directing all companies to which the Companies (Cost Accounting Records) Rules, 2011 apply, to get their cost accounting records for products covered under specified chapters of the Central Excise Tariff Act, 1985 audited by a Cost Auditor, the Company has made an application to the Central Government (MCA) for reappointment of M/s. Sagar & Associates as the Cost Auditor of the Company for the year ending 31st March, 2013 in respect of products covered under Chapters 84 and 87 of the Central Excise Tariff Act, 1985. The approval of the Central Government is awaited.

SUBSIDIARIES AND JOINT VENTURES

31. Pursuant to the Accounting Standard AS-21 issued by the Institute of Chartered Accountants of India, the Consolidated Financial Statements presented by the Company include the financial information of subsidiary companies. The Central Government has by General Circular No. 2/2011 dated 8th February, 2011, granted general exemption to companies for dispensing with the requirement of attaching the accounts of subsidiary companies, subject to certain conditions. As the Company has complied with all the conditions, the annual accounts and other documents of the subsidiary companies are not attached with the Balance Sheet of the Company. Details of capital, reserves, total assets, total liabilities, turnover/ income, etc., of the aforesaid subsidiaries form part of the Consolidated Financial Statements. The Annual Accounts of the subsidiary companies are open for inspection by any member/ investor and also available on the website of the Company - www.voltas.com. The Company will make the documents/ details available, upon request by any member of the Company or its subsidiaries interested in obtaining the same.

32. The economic situation in the Middle East region, where most of the Company's subsidiaries/joint ventures (JVs) operate, largely remained impacted like last year. As a result, the overseas subsidiaries and JVs, except Universal Voltas LLC, performed lower than the budgeted level. The geo-political situation and unrest amongst the local population in some countries in the Middle East Region also adversely affected the overall marketing efforts of the overseas subsidiaries/JVs. The financial performance and other details of major operating subsidiaries/JVs are given below.

33. Universal Voltas LLC, Abu Dhabi, a joint venture company engaged in the business of electro-mechanical projects and operations & maintenance of electro-mechanical works, performed better than last year and recorded turnover of AED 134.635 million with Profit of AED 37.043 million for the year ended 31st December, 2011.

34. Weather maker Limited (WML), engaged in the business of manufacturing galvanized iron, aluminium, black mild steel, stainless steel ducts and other specialty air distribution products is a wholly-owned subsidiary of the Company and has its manufacturing facility in Jebel Ali Free Zone, UAE. WML has reported turnover of AED 28.638 million and Profit of AED 2.086 million for the year ended 31st December, 2011.

35. Saudi Ensas Company for Engineering Services WLL (Saudi Ensas), a wholly-owned subsidiary of the Company in Jeddah, Kingdom of Saudi Arabia (KSA) is engaged in execution and operations/maintenance of electro- mechanical installations in KSA and has for the year ended 31st December, 2011, recorded higher turnover of SR 4.218 million. However, due to increase in staff costs and administrative expenses, including provision made for Zakat arrears upon rejection of appeal by the concerned authorities, Saudi Ensas incurred a loss of SR 2.124 million.

36. Voltas Oman LLC, was incorporated on 15th February, 2011, as a joint venture between Voltas (65% shareholding) and Mustafa Sultan Group (35% shareholding) to leverage the respective strengths of the joint venture partners by undertaking Engineering, Procurement and Construction (EPC) works for electro-mechanical projects in Sultanate of Oman. Voltas Oman LLC has reported loss of RO 0.208 million, mainly towards staff and administrative costs for the financial period between 15th February, 2011 and 31st December, 2011.

37. Lalbuksh Voltas Engineering Services & Trading LLC (Lalvol), a limited liability company incorporated in Sultanate of Oman is a subsidiary of the Company engaged in the business of Water Well Drilling, Water Management and Landscaping. Lalvol recorded turnover of RO 3.359 million and net profit of RO 0.278 million for the year ended 31st December, 2011.

38. The Company had entered into a joint venture agreement with Olayan Group in Riyadh, Kingdom of Saudi Arabia (KSA) and established a 50:50 joint venture company - Olayan Voltas Contracting Company Limited (OVCL) on 8th February, 2012, in Riyadh, KSA with initial capital of Saudi Riyal (SR) 10 million, contributed equally by both the partners. OVCL is engaged in the business of electro-mechanical projects in KSA and its first financial year is for the period between 8th February, 2012 and 31st December, 2012.

39. Universal Comfort Products Limited (UCPL), a wholly-owned subsidiary of the Company is engaged in the business of manufacturing air conditioners. Due to unfavourable weather conditions and low market sentiments, there was a drop in sales volumes of air conditioners. UCPL recorded lower turnover of Rs. 486 crores for the year ended 31st March, 2012 as compared to Rs. 492 crores in the previous year. However, due to better sales realization, efficient management of inventory and finance costs, UCPL had higher net profit at Rs. 34 crores for the year under review as compared to Rs. 27 crores in the previous year.

40. Rohini Industrial Electricals Limited (RIEL) is engaged in undertaking turnkey electrical and instrumentation projects for industrial and commercial sectors. The performance of RIEL continued to remain impacted in 2011-12 primarily due to old projects which had witnessed cost overruns and other deficiencies. RIEL has reported turnover of Rs. 117 crores and loss of Rs. 26 crores as compared to turnover of Rs. 162 crores and loss of Rs. 36 crores in the previous year. However, the new orders booked have better margins and in view of several initiatives taken to curtail the losses/streamline the operations, the performance of RIEL is expected to improve in the near future. RIEL has also issued Preference Shares aggregating Rs. 25 crores which were subscribed by Voltas and allotted on 29th March, 2012.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

41. Information pursuant to Section 217(1 )(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, relating to conservation of energy and technology absorption is given by way of an Annexure to this Report. As for information in respect of foreign exchange earnings and outgo, the same has been given in the notes forming part of the accounts for the year ended 31st March, 2012.

DIRECTORS' RESPONSIBILITY STATEMENT

42. Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors, based on the representations received from the Operating Management, confirm that:

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

(b) they have, in the selection of the accounting policies, consulted the Statutory Auditors and have applied their recommendations consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

(c) they have taken proper and sufficient care to the best of their knowledge and ability, for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) they have prepared the annual accounts on a going concern basis.

CORPORATE GOVERNANCE

43. Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, Management Discussion and Analysis, Corporate Governance Report and Auditors' Certificate regarding compliance of conditions of Corporate Governance are made a part of the Annual Report. A declaration signed by the Managing Director in regard to compliance with the Code of Conduct by the Board Members and Senior Management personnel forms part of the Annual Report.

DIRECTORATE

44. In accordance with the provisions of the Companies Act, 1956 and the Company's Articles of Association, Mr. S. N. Menon, Mr. Ishaat Hussain and Mr. Sanjay Johri retire by rotation and being eligible, offer themselves for reappointment.

45. Mr. Vinayak Deshpande was appointed as an Additional Director by the Board of Directors on 14th February, 2012. In accordance with the provisions of the Companies Act, 1956, Mr. Vinayak Deshpande holds office upto the date of the forthcoming Annual General Meeting and Notice under Section 257 of the Act has been received from a member proposing his appointment as Director of the Company. The Resolution seeking approval of the members for appointment of Mr. Vinayak Deshpande as a Director of the Company has been incorporated in the Notice of the forthcoming Annual General Meeting.

46. Mr. Ravi Kant stepped down as a Director of the Company on 14th February, 2012. The Directors place on record their sincere appreciation of the valuable services rendered and advice given by Mr. Ravi Kant during his long tenure on the Board since 10th April, 2001.

AUDITORS

47. At the Annual General Meeting, members will be required to appoint Auditors for the current year. Messrs. Deloitte Haskins & Sells, the present Auditors of the Company have pursuant to Section 224(1) of the Companies Act, 1956, furnished a certificate regarding their eligibility for reappointment. The approval of the members is also being sought for their appointment as the Branch Auditors of the Company. Attention of the members is invited to Item No. 7 of the Notice of the Annual General Meeting and the relevant Explanatory Statement.

GENERAL

48. The Notes forming part of the Accounts are self-explanatory or to the extent necessary, have been dealt with in the preceding paragraphs of the Report.

On behalf of the Board of Directors

ISHAAT HUSSAIN

Chairman

Mumbai, 24th May, 2012


Mar 31, 2011

To the Members

The Directors present their Fifty-Seventh Annual Report and the Audited Statement of Accounts for the year ended 31st March 2011.

FINANCIAL RESULTS

Rs in Crores

Stand-alone Consolidated

2010-11 2009-10 2010-11 2009-10

2. Sales and Services 5169 4517 5211 4782

profit for the year after meeting all expenses but before interest, depreciation and exceptional items 507 472 522 538

Interest 13 7 16 10

Depreciation 16 16 21 21

profit before exceptional items 478 449 485 507

Exceptional items 45 36 40 25

profit before tax 523 485 525 532

Provision for taxation 169 141 173 147

profit after tax 354 344 352 385

Minority Interest and Share of (profit)/Loss of Associate - - 5 (4)

profit after Minority Interest and Share of (profit)/Loss of Associate 354 344 357 381

Adding thereto:

- Balance brought forward from the previous year 82 62 125 71

- Amount transferred from Foreign Projects Reserve - 3 - 3

- Foreign Exchange Translation Diference - - 1 (1)

- Reserves and Surplus of a subsidiary transferred on liquidation - - 5 -

profit available for appro -priations 436 409 488 454

Appropriations:

- General Reserve 270 250 271 251

- Proposed Dividend 66 66 66 66

- Tax on Dividend 11 11 11 11

- Legal and Special Reserve - - 1 1

Leaving a balance to be carried forward 89 82 139 125

DIVIDEND

3. The Company's dividend policy is based on the need to balance the twin objectives of appropriately rewarding the shareholders with dividend and of conserving resources to meet the Company's future needs. The Directors recommend a dividend of Rs 2 per equity share of Rs 1 each (200%) for the year 2010-11 (2009-10: 200%).

OPERATIONS

4. The Business Environment during the year under review was full of uncertainty both in domestic as well as in international markets. In India, major areas of concern were high infation and increase in commodity prices. Interest rates were increased by RBI almost every quarter and there was a declining trend in the growth rate of IIP numbers. Despite this dificultscenario, the Company has been able to augment its revenue from Rs 4517 crores to Rs 5169 crores. While profits have also kept pace on a stand-alone basis, they were impacted by significantnegative swing in Rohini Industrial Electricals Limited. The domestic Projects business focused on non-traditional areas of Industrial and Infrastructure, as also on Water supply and Water treatment as a result of which, there has been around 45% increase in the order book position as compared to the previous year.

5. A very challenging and competitive environment prevailed in the Middle East and there was a significantdrop in announcement of new projects in Dubai. This resulted in new order booking being much lower than what was anticipated. However, the carry forward order book continues to be comfortable at almost Rs 3000 crores on a consolidated basis.

6. Engineering Products and Services business had a conducive environment and in particular, Textile Machinery business performed well despite several unfavorable conditions like closure of looms in Tirupur due to environmental issues, high cotton prices and suspension of the Textile Upgradation Fund.

7. Materials Handling business performed well due to higher volumes. Despite several new mining projects getting impacted due to non-availability of clearances and low award of new Road Construction projects, Mining and Construction business has done well. In the Mining business, the focus has been more on maintenance and operation contracts and stock and sale of spares and accessories. A significant achievement of the business during the year was its entry in Mozambique for providing the Maintenance and Operations Services.

8. Exceptionally severe summer and the generally upbeat consumer sentiment in the early part of the year helped in significant improvement in volumes of Airconditioners, where the growth in Company's volumes continued to be higher than the industry, resulting in an increase in the market share, from 15% to around 18%.

9. The Company continued to focus on higher productivity and lower costs as a means to improve its competitive position.

FINANCE

10. The Money market during most part of 2010-11 was tight with rising interest costs and infation in India and some amount of stress in the international market. This along with changed business model in the projects business in India, with higher concentration on industrial and infrastructure MEP, where the Company operates more as a sub-contractor to the turnkey main contractors, elongated the cycle of submission and recovery of claims. In the international market, significantresources were engaged in design-build projects with high costs being incurred during the initial designing phase, which can only be recovered once the execution of projects commences. During the year under review, some large projects like Burj Khalifa were completed, where settlement of claims and fnal measurement take an extended period of time. All these factors have resulted in much higher receivables and consequently, engagement of working capital. Consequently, cash generation during the year has been low despite the Company's policy of ensuring cash generation.

11. Despite this, the liquidity position of the Company continues to be satisfactory with liquid investments of Rs 225 crores. The Company also ensured that surplus funds are used to reduce borrowings of its subsidiary companies so that the overall cost of funds is minimised. However, there were some project specific borrowings in the international business which resulted in overall consolidated borrowings of Rs 138 crores.

12. Infationary pressures in India have resulted in higher interest rates, which while being a challenge for some other organizations, has benefited the Company in terms of interest earnings on surplus funds. Management will focus its attention in the future to bring down the levels of inventories and receivables and thereby release cash in the system. Investment of surplus funds, is being regularly monitored by the Investment Committee of the Board, so as to maximize the returns while ensuring low risk.

TATA BUSINESS EXCELLENCE MODEL (TBEM)

13. The Company continued to put greater eforts on its business excellence model through a number of improvement initiatives including Six Sigma projects for operational excellence. The Balanced Scorecard mechanism adopted by the Company was made more robust through a strategy deployment matrix aimed at efective implementation of action plans in line with the strategic objectives. The initiatives at the manufacturing plants in the area of Total Quality Management and Total Productive Maintenance made satisfactory progress. OHSAS 18001 was rolled out across some major areas and during the current year, its coverage will be extended to other parts of the organization, to enhance the culture of safety.

14. During the year under review, the Company's Unitary Products business participated in the Tata Group level TBEM External Assessment and its performance was rated as 'Good Performance', entitling the business to an award at the Group level. Other businesses were subjected to a process of Internal Assessment to evaluate their respective progress on the Business Excellence journey. The overseas Electro- mechanical business recently received the "Dubai Quality Appreciation Programme Award" at UAE. This prestigious award was presented to Voltas by the Crown Prince of Dubai in the presence of the UAE Prime Minister/Dubai's Ruler, at a ceremony in Dubai on 5th April, 2011. The Company has developed a pool of trained TBEM assessors to support its Business Excellence initiatives and also to provide external assessors at the Group level.

IT INITIATIVES

15. The Company has taken various IT initiatives and SAP modules implemented for the international Electro- mechanical business have started showing benefits in terms of better budgetary control. The Primavera project management system has yielded better visibility of project schedules and variances.

16. Customer Relationship Management (CRM) software for the domestic Electro-mechanical business helped in better tracking of service calls and service SLAs for maintenance projects. Project dashboards prepared in SAP Business Objects yielded better control on project costs and working capital of domestic Electro-mechanical as well as Mining & Construction Equipment businesses.

17. The Unitary Products business continued its focus on enhancing its Customer Relationship Management (CRM) system and using the database for enabling better service deliveries. The automated system helped in better management of dealer accounts.

18. The Company has also successfully made its IT systems IFRS compliant.

COMMUNITY DEVELOPMENT

19. Community development takes the form of human development through Voltas' Core Competency projects. The underlying belief is in the sharing of knowledge and instruction and not charitable donation. The desired outcome is to free recipients from dependence on hand-outs and make them self-reliant and employable, with technical capabilities attested by end-of-course certificates and various 'soft' skills. The Company continued to partner with the Joseph Cardijn Technical School in Mumbai, ofering a course that 249 students from 17 batches have successfully completed since 2002. Since 2008, the Company has also partnered with Bosco Boys, Mumbai and GMR Varalakshmi Foundation, Hyderabad, from which 20 students from 2 batches and 231 students from 13 batches, respectively have successfully completed the course.

20. The Company increased its footprint by tying up with CAP Foundation (Hyderabad) on an all-India basis and Manipal University (Karnataka), for imparting technical training in air conditioning and refrigeration. This was also pursued at the Company's Pantnagar plant through in-house training programme. More than 1000 trainees benefited from the programmes conducted during the year under review.

21. Afrmative Action is defned as a voluntary commitment by Indian companies to help the Government and civil society in the national endeavour to ensure equal opportunity to members of the Scheduled Castes and Scheduled Tribes (SCs/STs) communities. A beginning was made to embed Afrmative Action initiatives in the Company's HR and other business activities. About 260 SC/ST trainees are presently undergoing technical training through such programmes.

22. Voltas Organization of Women (VOW), a registered Public Charitable Trust, has been working towards providing medical and educational relief to the needy. The membership of VOW consists of lady employees and the wives of male employees. VOW supported the Bethany Society in the formation of self-help groups for women, the Shanti Avedna Sadan for terminally ill cancer patients and the Snehalaya Charitable Trust for vocational training for the mentally and physically challenged, besides giving medical relief to the poor and needy. Under the aegis of VOW, volunteers from Voltas as well as other Tata companies visited a village of the Kathkari tribe at Panvel to celebrate International Women's Day. The volunteers donated food and utility items to all families in the village.

GLOBAL COMPACT AND CARBON DISCLOSURE PROJECT

23. The Company is a signatory to the UN Global Compact and adheres to the ten key principles based on universally agreed and internationally applicable values and goals in the areas of Human Rights, Labour Standards and Environment.

24. The Company is also a signatory to the Carbon Disclosure Project initiated by CDP-UK with Confederation of Indian Industries and World Wild Life Fund. The Company shares information pertaining to sustainability-related issues with CDP, on an annual basis.

ENVIRONMENT AND SAFETY

25. In line with the Policy on Climate Change, the Company has put in place action plans to reduce its carbon footprint and also develop environment-friendly products and appropriate engineering solutions. Implementation of ISO 14001 is in an advanced stage at manufacturing locations, as also implementation of OHSAS 18001 for Health and Safety, at some of the key locations. All the manufacturing plants have appropriate safety initiatives underway, headed by senior ofcials who diligently oversee the safety aspect.

STATEMENT OF EMPLOYEES' PARTICULARS

26. The information required under Section 217(2A) of the Companies Act, 1956 and the Rules made thereunder, is provided in an Annexure forming part of this Report. In terms of Section 219(1)(b)(iv) of the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary.

APPOINTMENT OF COST AUDITOR

27. As per the directions given by the Central Government, the Company has, based on an application made, received the Government's approval for re-appointment of M/s. Sagar & Associates, a frm of Cost Accountants as the Cost Auditor of the Company for the year ending 31st March, 2012 in respect of refrigeration products manufactured by the Company.

SUBSIDIARIES AND JOINT VENTURES

28. Pursuant to the Accounting Standard AS-21 issued by the Institute of Chartered Accountants of India, Consolidated Financial Statements presented by the Company include the financial information of subsidiary companies. The Central Government has by General Circular No.2/2011 dated 8th February, 2011, granted general exemption to companies from dispensing with the requirement of attaching the accounts of subsidiary companies, subject to certain conditions. As the Company has complied with all the conditions, the annual accounts and other documents of the subsidiary companies are not attached with the Balance Sheet of the Company. Details of capital, reserves, total assets, total liabilities, turnover/income, etc., of the subsidiaries forms part of the Consolidated Financial Statements. The Annual Accounts of the subsidiary companies are open for inspection by any member/investor and also available on the website of the Company - www.voltas.com. The Company will make the documents/details available, upon request by any member of the Company or its subsidiaries interested in obtaining the same.

29. Uncertain conditions in the Middle East, where most of the Company's subsidiaries/joint ventures (JV) operate, continued to face headwinds as a result of which, the overseas subsidiary and JV companies performed lower than the previous year. However, towards the end of the year, the environment improved for smaller projects in which arena these companies operate and therefore, the order booking has been much better as compared to the corresponding period in the previous year. The financial performance and other details of major operating subsidiaries/joint venture companies are given below.

30. Weathermaker Limited (WML) engaged in the business of manufacturing galvanized iron, aluminium, black mild steel, stainless steel ducts and other speciality air distribution products is a wholly-owned subsidiary of the Company and has its manufacturing facility in Jebel Ali Free Zone, UAE. WML has reported turnover of AED 27.659 million and profit of AED 3.882 million for the year ended 31st December, 2010.

31. Saudi Ensas Company for Engineering Services WLL (Saudi Ensas), a wholly-owned subsidiary of the Company in Jeddah, Kingdom of Saudi Arabia is engaged in the execution and operations/maintenance of electro-mechanical installations in KSA and has for the year ended 31st December, 2010, recorded turnover of SR 2.882 million and higher Net profit of SR 3.185 million, due to reversal of certain past provisions.

32. The Company has entered into a joint venture arrangement with Mustafa Sultan Group and established a joint venture company – Voltas Oman LLC on 15th February, 2011 in Sultanate of Oman with initial capital of Omani Riyal 500,000, to engage in the business of executing electro-mechanical projects in Sultanate of Oman. Voltas Oman LLC is a subsidiary of Voltas and 65% of its capital is held by Voltas Netherlands B.V., a wholly owned subsidiary of Voltas. The first financial year of Voltas Oman LLC is for the period between 15th February, 2011 and 31st December, 2011.

33. Lalbuksh Voltas Engineering Services & Trading LLC (Lalvol), a limited liability company incorporated in Sultanate of Oman is a joint venture company engaged in the business of Water Well Drilling, Water Management and Landscaping. The Company alongwith its subsidiary – Voltas Netherlands B.V. held 49% share capital and balance 51% was held by Lalbuksh Contracting & Trading Establishment LLC., the local partner. Voltas has recently through Voltas Netherlands B.V., acquired 11% shareholding of the local partner and increased the overall shareholding of Voltas Group in Lalvol to 60%. Upon completion of the legal process, Lalvol became a subsidiary of the Company efective 31st March, 2011.

34. Universal Comfort Products Limited (UCPL), a wholly-owned subsidiary of the Company, engaged in the business of manufacturing air conditioners, has due to larger volumes of own manufactured airconditioners, recorded higher turnover of Rs 492 crores and Net profit of Rs 27 crores for the year ended 31st March, 2011 as compared to turnover of Rs 332 crores and Net profit of Rs 14 crores in the previous year.

35. During the year under review, the Company increased its shareholding in Rohini Industrial Electricals Limited (RIEL) from 67.33% to 83.67% of its share capital. RIEL is engaged in undertaking large turnkey electrical and instrumentation projects for industrial and commercial sectors. The performance of RIEL was a major disappointment, where due to multiplicity of reasons, profit of Rs 14 crores achieved in 2009-10 slid into a loss of Rs 35 crores in 2010-11, a swing of Rs 49 crores. However, the margins in the carry forward order book are at a satisfactory level and therefore, going forward, there should be improvement in its performance.

36. Kingdom of Saudi Arabia (KSA) has huge business potential in construction segment and provides good opportunity to the Company's overseas electro-mechanical business. After careful evaluation and selection process through external experts, the Company entered into a joint venture arrangement with Olayan Group in Riyadh, KSA to establish a joint venture company – Olayan Voltas Contracting LLC, with 50:50 shareholding to engage in the business of electro-mechanical projects in KSA. Olayan is one of the mostinfluential business groups in KSA and is engaged in various businesses through successful joint ventures with globally renowned corporations.

37. Pursuant to a joint venture arrangement with KION Group, Germany, the Company has subsequent to the close of the financial year, transferred its Materials Handling business to a joint venture company (JVC) – Voltas Materials Handling Private Limited. Majority of the equity share capital of the JVC is held by Linde Material Handling Asia Pacifc Pte Limited, Singapore, an afliate of KION Group. The Company has also entered into a Supply Agreement with the JVC for forklifts and warehousing equipment and granted licence to the JVC for use of 'Voltas' brand for forklifts and warehousing equipment.



CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

38. Information pursuant to Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, relating to conservation of energy and technology absorption is given by way of an Annexure to this Report. As for information in respect of foreign exchange earnings and outgo, the same has been given in the notes forming part of the accounts for the year ended 31st March, 2011.

DIRECTORS' RESPONSIBILITY STATEMENT

39. Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors, based on the representations received from the Operating Management, confrm that:

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

(b) they have, in the selection of the accounting policies, consulted the Statutory Auditors and have applied their recommendations consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of afairs of the Company at the end of the financial year and of the profit of the Company for that period;

(c) they have taken proper and suficientcare to the best of their knowledge and ability, for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) they have prepared the annual accounts on a going concern basis.

CORPORATE GOVERNANCE

40. Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, Management Discussion and Analysis, Corporate Governance Report and Auditors' certificate regarding compliance of conditions of Corporate Governance are made a part of the Annual Report. A declaration signed by the Managing Director in regard to compliance with the Code of Conduct by the Board Members and Senior Management personnel forms part of the Annual Report.

DIRECTORATE

41. In accordance with the provisions of the Companies Act, 1956 and the Company's Articles of Association, Mr. Noel N. Tata and Mr. Jimmy S. Bilimoria retire by rotation and being, eligible, ofer themselves for re-election.

42. Mr. N. D. Khurody, who is also due to retire by rotation has indicated his desire not to seek re-election. The Directors place on record their sincere appreciation of the valuable services rendered and advice given by Mr. N. D. Khurody during his long tenure on the Board since 28th January, 2002.

43. Mr. R. N. Mukhija was appointed as an Additional Director by the Board of Directors on 3rd December, 2010. In accordance with the provisions of the Companies Act, 1956, Mr. R. N. Mukhija holds ofce upto the date of the forthcoming Annual General Meeting and Notice under Section 257 of the Act has been received from a member proposing his appointment as Director of the Company. The Resolution seeking approval of the members for appointment of Mr. R. N. Mukhija as a Director of the Company has been incorporated in the Notice of the forthcoming Annual General Meeting.

44. Mr. N. J. Jhaveri retired as a Director of the Company on 9th August, 2010 on completing 75 years of age, in line with the Company's Retirement Policy. The Directors place on record their sincere appreciation of the valuable services rendered and advice given by Mr. N. J. Jhaveri during his long tenure on the Board since 10th August, 1998.

AUDITORS

45. At the Annual General Meeting, members will be required to appoint Auditors for the current year. Messrs. Deloitte Haskins & Sells, the present Auditors of the Company have pursuant to Section 224(1) of the Companies Act, 1956, furnished a certificate regarding their eligibility for re-appointment. The approval of the members is also being sought for their appointment as the Branch Auditors of the Company. Attention of the members is invited to Item No. 7 of the Notice of the Annual General Meeting and the relevant Explanatory Statement.

GENERAL

46. The Notes forming part of the Accounts are self-explanatory or to the extent necessary, have been dealt with in the preceding paragraphs of the Report.

On behalf of the Board of Directors

ISHAAT HUSSAIN

Chairman

Mumbai, 19th May, 2011


Mar 31, 2010

The Directors have pleasure in presenting their Fifty-Sixth Annual Report and the Audited Statement of Accounts for the year ended 31st March, 2010.

FINANCIAL RESULTS

Rs. in Crores

Stand-alone Consolidated

2009-10 2008-09 2009-10 2008-09

2. Sales and Services 4565 4070 4830 4374

Proft for the year after meeting all expenses but before depreciation and exceptional items 465 352 528 367

Depreciation 16 17 21 21

Proft before exceptional items 449 335 507 346

Exceptional items 36 32 25 26

Proft before tax 485 367 532 372

Provision for taxation including deferred tax and

MAT credit entitlement 141 115 147 117

Proft after tax 344 252 385 255

Minority Interest and Share of Loss of Associate _ _ (4) (3)

Proft after Minority Interest and Share of Loss of Associate 344 252 381 252

Adding thereto:

- Balance brought forward from the previous year 62 59 71 73

- Amount transferred from Foreign Projects Reserve 3 3 3 3

- Foreign Exchange Translation Diference _ _ (1) 3 Proft available for appropriations 409 314 454 331

Appropriations:

- General Reserve 250 190 251 197

- Proposed Dividend 66 53 66 53

- Tax on Dividend 11 9 11 9

- Legal and Special Reserves _ _ 1 1 Leaving a balance to be carried forward 82 62 125 71



DIVIDEND

3. The Companys dividend policy is based on the need to balance the twin objectives of appropriately rewarding the shareholders with dividend and of conserving resources to meet the Companys future needs. The Directors recommend a dividend of Rs.2 per equity share of Re.1 each (200%) for the year 2009-10 (2008-09: 160%).

OPERATIONS

4. The after-efects of the global slowdown of 2008, spilled over into the frst half of the fnancial year 2009-10. Though there was an improvement in the domestic business environment in the latter half of the fnancial year, the emergence of the Dubai debt crisis again created some uncertainty about the pace and extent of the global economic recovery.

5. Against this backdrop, the Turnover of the Company grew by 12% to Rs.4565 crores and the Proft before Tax increased by over 32% to Rs.485 crores. The Earning per share for the year was Rs.10.40, an increase of 36%.

6. The growth of the Company was due to both external factors as well as the eforts of the Management. On the external front, as the general outlook improved and consumers resumed spending, there was a signifcant pick-up in the consumer durables sector and this benefted our Unitary Products Business. A planned expansion of the distribution channel, improved supply chain management and better product-mix and an aggressive advertising strategy fuelled growth of sales of both Room Air Conditioners as well as Refrigeration products in India.

7. The efective execution of projects by the Companys international electro-mechanical business also contributed signifcantly to the improved proftability of the Company. Your Company won laurels for its role in completing the Formula 1 Race Track in Abu Dhabi, a project of world-class quality that was implemented under very demanding time-lines. The Company also played a signifcant role in completing the electro-mechanical works on the iconic Burj Khalifa Tower in Dubai, the worlds tallest building, in time for the opening in early-2010.

8. The general economic uncertainty did, however, lead to a slowdown in the award of new electro-mechanical projects, both domestically and overseas. An overhang of supply in the commercial buildings sector has slowed down the pace of implementation of new projects. To mitigate this impact, your Company is making a deliberate move to take on more electro-mechanical projects in the industrial segment, including building up capabilities and requisite technical pre-qualifcations. The Companys equity stake in Rohini Industrial Electricals Limited was in line with this strategy, enabling it to expand the domestic project oferings signifcantly into electrical contracting. The rising price of oil has also led to a sustained thrust by governments in the Middle East, particularly the GCC countries, to encourage construction projects and your Company has picked up some new contracts in 2010.

9. The Engineering Products and Services businesses have also seen a pick up in activity during the year, both in the textile machinery business as well as in mining and construction equipment business. Though the pace of activity is below the peak reached earlier, companies are again beginning to invest in capital goods and the trend is encouraging.

10. Your Companys management took several initiatives to mitigate the volatility in global metal prices as well as currency fuctuations, entering into advance contracts where feasible. There was also a conscious thrust to evolve a leaner cost structure and this enabled the Company to improve its performance.

FINANCE

11. The Companys policies in respect of fnances and foreign exchange helped the Company steer through a challenging environment.

12. The Companys cash fow for the year has been good and in line with proftability. With continued good working capital management, the amount and number of days of receivables have declined. Most of the excess stock has been liquidated. At the end of the year, the Company held liquid investments in excess of Rs.200 crores as against Rs. 121 crores at the end of the previous year. The return on liquid investments has been lower compared to the previous year due to the low interest yields that prevailed during the year. The Company has also given advances to its subsidiary companies to meet their liquidity imbalances and reduce dependence on external fnancing. With efcient realization of collections, the Company has reduced foats in the system. In the International Operations, cash balances have risen from Rs.240 crores per end of the previous year to Rs. 308 crores. During the year, the Company invested around Rs. 24 crores in acquiring a further 16% shareholding in Rohini Industrial Electricals Limited and the Company now owns 67% in Rohini. The Companys external debt, at the year end was negligible at Rs.19 crores and the Net Worth was Rs.995 crores.

13. On management of foreign exchange, except conversion of balances held overseas, the results have been encouraging. The Companys philosophy is to hedge the known risks in a conservative manner.

TATA BUSINESS EXCELLENCE MODEL (TBEM)

14. As a part of ongoing eforts to create a culture of continuous improvement and total employee engagement, the Company focused on various initiatives, such as Six Sigma, Process Management & Process Improvement, Strategy Deployment Matrix and Total Productive Maintenance. These have been progressing well, and providing the desired benefts. The Company has undertaken implementation of OHSAS 18001 in its drive towards a strong and efective safety policy.

15. During the year, the international Electro-Mechanical business (EM) and the domestic Electro-Mechanical and Refrigeration business (EM&R) participated in the Tata Group level TBEM External Assessment. While the performance of EM&R was steady as compared to the previous assessment, the performance of EM showed considerable improvement, entitling the business to an award at the Group level. Both EM and EM&R began work on action plans for further improvements based on feedback reports from the Assessments. The Company has developed a pool of trained TBEM Assessors to support its Business Excellence initiatives and also to provide External Assessors at the Group level.

IT INITIATIVES

16. During the year under review, the Company initiated and completed several strategic projects in IT. The Human Capital Management (SAP-HCM) system for overseas employees integrated all employees on a single platform, yielding better control over manpower costs. SAP modules implemented for international Electro-mechanical business would result in better project management through increased visibility and operational control.

17. Customer Relationship Management (CRM) software implemented for the domestic Electro-mechanical business will help in better service delivery of maintenance projects. Unitary Products business upgraded its existing CRM software by incorporating Dealers Service Reports and claims, with linkage through the SAP system.

18. The upgrade of SAP to the latest version would also enable the Company comply with the reporting requirements proposed under IFRS.

COMMUNITY DEVELOPMENT

19. The Company plays an active role in improving the quality of life of the communities amongst which it operates, through a well-defned framework for implementing its Community Development philosophy.

20. Through its Core Competency projects, the Company continues to provide hands-on technical training to youth from less privileged backgrounds. The involvement of the Company in terms of employees time, knowledge and interest, as well as fnancial assistance, goes a long way towards the projects usefulness and productivity.The objective of the programme is to impart vocational training to underprivileged youth to empower them, educate them, and enhance their employability. The Company continues to partner with the Joseph Cardijn Technical School, Mumbai, from which 15 batches covering 214 students have completed the course successfully since 2002. The Company has also partnered with Bosco Boys, Mumbai, with one batch of 9 students so far; and GMR Varalakshmi Foundation, Hyderabad, with 5 batches of 83 students to date. Soft-skills programmes in Communication, Personality Development and Customer Care are being conducted for the students.

21. As part of the implementation of its Afrmative Action policy, in accordance with CII guidelines, the Company has rolled out initiatives in the areas of Employment, Employability, Entrepreneurship and Aid in Education. The Company has adopted the Policy of Positive Discrimination in recruitment towards candidates belonging to SC/ST communities. Similarly, the Company has a tie-up with selected Technical Institutes across India in order to increase scope for employment among trainees from SC/ST communities. Hitherto about 93 trainees from SC/ST candidates have completed the Technical Training and about 28 trainees have been deployed on overseas projects. Similarly, in the areas of employability and entrepreneurship, the Company has put in place a scheme for providing capacity-building training in housekeeping and gardening to SC/ST candidates. Three batches have successfully completed the training under this scheme.

22. As part of Aid-in-Education, the Company provides monetary help to deserving SC/ST students from engineering colleges. During the year, the Company extended scholarships to 24 students from the Mechanical and Electrical streams. In addition, the Company sponsored a youth delegate to the Climate Change Convention held at the Bella Centre in Copenhagen, Denmark. The Company is also working towards adopting appropriate policies for positive discrimination in the areas of employment and vendor development.

23. In accord with its commitment to energy-saving and ‘green initiatives, the Company partnered with The Energy & Resources Institute (TERI) to sponsor electrifcation of 10 villages entirely through sustainable energy sources. The initiative was carried forward by Unitary Products business, linked to a nationwide drive to promote awareness of energy-saving products such as Voltas ‘Star-rated ACs.

24. During the year, the Companys volunteers participated in numerous activities, including care for the elderly, income generation programmes, tutoring and mentoring of orphans and underprivileged, volunteer visits to care-giving institutions, blood donation drives, awareness programmes such as for Road Safety and Environment, and assistance to SC/ST children with specialized English- language classes and mid-day meals.

25. Voltas Organisation of Women (VOW), exclusively run by lady employees and the wives of male employees, continued to live up to its objective of helping the needy by way of providing fnancial assistance in the feld of health and education and promoting the upliftment of women. In 2009, VOW organized street plays on human trafcking, domestic violence and property rights of women. VOW also supported vocational training for women through its various partners.

GLOBAL COMPACT AND CARBON DISCLOSURE PROJECT

26. The Company is a signatory to the Global Compact and adheres to the ten key principles based on universally agreed and internationally applicable values and goals in the areas of Human Rights, Labour Standards and Environment.

27. The Company is also a signatory to the Carbon Disclosure Project initiated by CDP-UK with Confederation of Indian Industries and World Wild Life Fund. The Company shares information pertaining to sustainability-related issues with CDP, on an annual basis.

ENVIRONMENT AND SAFETY

28. Towards this end the Company recently completed a Carbon Footprint mapping exercise for all its manufacturing plants and has undertaken initiatives to reduce its Carbon Footprint. During the year, the Company formally adopted a Policy on Climate Change. The Thane Manufacturing Plant is in an advanced stage of ISO 14001 standard implementation, which deals with environmental issues. The Company has also reached an advanced stage of OHSAS 18001 standard implementation at one of its manufacturing plants, one project site and at the Head Ofce. During the year this initiative will be further extended to other parts of the organization. All the manufacturing plants have appropriate safety initiatives under way, headed by senior ofcials who diligently oversee the safety aspect.

STATEMENT OF EMPLOYEES PARTICULARS

29. The information required under Section 217(2A) of the Companies Act, 1956 and the Rules made thereunder, is provided in an Annexure forming part of this Report. In terms of Section 219(1)(b)(iv) of the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary.

APPOINTMENT OF COST AUDITOR

30. As per the directions given by the Central Government, the Company has, based on an application made, received the Governments approval for re-appointment of M/s. Sagar & Associates, a frm of Cost Accountants as the Cost Auditors of the Company for the year ending 31st March, 2011 in respect of refrigeration products manufactured by the Company.

APPOINTMENT OF TSR DARASHAW LIMITED AS REGISTRAR AND SHARE TRANSFER AGENT

31. In order to beneft from the specialized services provided by TSR Darashaw Limited (TSRDL) and taking into consideration, various other factors including costs and upgradation of IT systems, the Company was in dialogue with TSRDL for providing depository related services for the shares held in demat form and as Transfer Agent in respect of shares held in physical form. TSRDL are the Registrars and Share Transfer Agents for most of the listed Tata companies. Accordingly, at the last Annual General Meeting held on 10th August, 2009, the Company had taken the approval of the shareholders for keeping the Registers and Indexes of Members and Debentureholders and copies of Annual Returns and other relevant documents in the premises of TSRDL in addition to the Registered Ofce and/or such other ofce building within the premises of the Company at Chinchpokli. The transfer of share related activities including records and database has been completed and TSRDL has been appointed as the Registrar and Share Transfer Agent of the Company from 8th March, 2010. A suitable announcement to that efect was published in the newspapers and individual intimation was also sent to all the shareholders.

SUBSIDIARIES

32. Pursuant to the Accounting Standard AS-21 issued by the Institute of Chartered Accountants of India, Consolidated Financial Statements presented by the Company include the fnancial information of subsidiary companies, namely Weathermaker Limited, Saudi Ensas Company for Engineering Services W.L.L., Metrovol FZE, VIL Overseas Enterprises B.V., Voice Antilles N.V., Universal Comfort Products Limited, Rohini Industrial Electricals Limited, Simto Investment Company Limited and Auto Aircon (India) Limited. In terms of the approval granted by the Central Government under Section 212(8) of the Companies Act, 1956, copy of the Balance Sheet, Proft and Loss Account, Directors Report, Auditors Report and other documents of the aforesaid subsidiary companies for the year ended 31st March, 2010 (31st December, 2009 in case of Weathermaker and Saudi Ensas), have not been attached to the Balance Sheet of the Company. A statement giving details of turnover/income, net proft, dividend, share capital, reserves and surplus, assets and liabilities, etc. of the aforesaid subsidiaries forms part of the Annual Report. The Annual Accounts of the subsidiary companies are open for inspection by any member/ investor and also available on the website of the Company - www.voltas.com. The Company will make the documents/ details available, upon request by any member of the Company or its subsidiaries interested in obtaining the same.

33. Weathermaker Limited (WML) engaged in the business of manufacturing galvanized iron, aluminium, black mild steel and stainless steel duct is a wholly-owned subsidiary of the Company and has its manufacturing facility in Jebel Ali Free Zone, UAE. WML has reported turnover of AED 33.423 million and profit of AED 5.053 million for the year ended 31st December, 2009.

34. The rehabilitation/fnancial restructuring of Saudi Ensas Company for Engineering Services WLL (Saudi Ensas), a wholly-owned subsidiary of the Company in Jeddah, Kingdom of Saudi Arabia (KSA) is almost complete. Saudi Ensas is engaged in the execution and operations/ maintenance of electro-mechanical installations in KSA and has for the year ended 31st December, 2009, recorded turnover of SR 10.248 million and net proft of SR 0.109 million. The Company has provided fnancial assistance from time to time, aggregating SR 19.955 million (equivalent to Rs.24 crores approx.) to Saudi Ensas. KSA has huge business potential and provides good opportunity to the Companys overseas electro-mechanical business. It was therefore decided to establish a branch ofce of the Company in KSA, subject to requisite approvals including commercial registration. While small and medium size projects would be catered to by Saudi Ensas, large size projects would be executed by the Companys branch ofce in KSA.

35. Universal Comfort Products Limited (UCPL), a wholly- owned subsidiary of the Company, engaged in the business of manufacturing air conditioners, has recorded a turnover of Rs.332 crores and net proft of Rs.14 crores for the year ended 31st March, 2010.

36. During the year under review, the Company increased its shareholding in Rohini Industrial Electricals Limited (RIEL) from 51% to 67.33% of its share capital. RIEL is engaged in undertaking large turnkey electrical and instrumentation projects for industrial and commercial sectors and recorded turnover of Rs. 214 crores and net proft of Rs. 9 crores for the year ended 31st March, 2010.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

37. Information pursuant to Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, relating to conservation of energy and technology absorption is given by way of an Annexure to this Report. As for information in respect of foreign exchange earnings and outgo, the same has been given in the notes forming part of the accounts for the year ended 31st March 2010.

DIRECTORS RESPONSIBILITY STATEMENT

38. Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors, based on the representations received from the Operating Management, confrm that:

(a) In the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

(b) They have, in the selection of the accounting policies, consulted the Statutory Auditors and have applied their recommendations consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of afairs of the Company at the end of the financial year and of the proft of the Company for that period;

(c) They have taken proper and sufcient care to the best of their knowledge and ability, for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) They have prepared the annual accounts on a going concern basis.

CORPORATE GOVERNANCE

39. Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, Management Discussion and Analysis, Corporate Governance Report and Auditors Certifcate regarding compliance of conditions of Corporate Governance are made a part of the Annual Report. A declaration signed by the Managing Director in regard to compliance with the Code of Conduct by the Board Members and Senior Management personnel forms part of the Annual Report.

DIRECTORATE

40. In accordance with the provisions of the Companies Act, 1956 and the Companys Articles of Association, Mr. Ishaat Hussain, Mr. Nasser Munjee and Mr. Ravi Kant retire by rotation and being eligible, offer themselves for re-election.

41. Mr. Nani Javeri was appointed an Additional Director by the Board at its Meeting held on 29th October, 2009. Mr. Sanjay Johri was appointed Additional Director and as the Managing Director of the Company with efect from 23rd April, 2010 by the Board at its Meeting held on 19th April, 2010. In accordance with the provisions of the Companies Act, 1956, Mr. Nani Javeri and Mr. Sanjay Johri hold ofce upto the date of the forthcoming Annual General Meeting and Notices under Section 257 of the Act have been received from a member proposing their appointment as Director of the Company. Resolutions seeking approval of the members for appointment of Mr. Nani Javeri as a Director and Mr. Sanjay Johri as a Director and Managing Director of the Company have been incorporated in the Notice of the forthcoming Annual General Meeting and the Explanatory Statements thereto.

42 Mr. S.D. Kulkarni retired as a Director of the Company on 20th September, 2009 on completing 75 years of age, in line with the Companys Retirement Policy. The Directors place on record their sincere appreciation of the valuable advice and guidance given by Mr. Kulkarni during his long tenure on the Board since September 1999.

43 Mr. A. Soni retired as the Managing Director of the Company upon expiry of his contact on 22nd April, 2010. The Directors appreciated the enormous eforts put in by Mr. Soni and his outstanding contribution in transforming Voltas and for the signifcant improvement in the fnancial performance of the Company, over the past few years. The Board of Directors complimented the valuable services rendered and the excellent work done by Mr. Soni during his long tenure on the Board since September 2000.

AUDITORS

44. At the Annual General Meeting, members will be required to appoint Auditors for the current year. Messrs. Deloitte Haskins & Sells, the present Auditors of the Company have pursuant to Section 224(1) of the Companies Act, 1956, furnished a certifcate regarding their eligibility for re-appointment. The approval of the members is also being sought for their appointment as the Branch Auditors of the Company. Attention of the members is invited to Item No.9 of the Notice of the Annual General Meeting and the relevant Explanatory Statement.

GENERAL

45. The Notes forming part of the Accounts are self-explanatory or to the extent necessary, have been dealt with in the preceding paragraphs of the Report.

On behalf of the Board of Directors

ISHAAT HUSSAIN

Chairman

Mumbai, 28th May, 2010

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