• Flat growth in revenue was largely due to lower revenue from Electro Mechanical Project (EMP) business. The segment revenue of EMP was down by 10% to Rs 809.33 crore (or 57% of total sales). However the segment revenue of Unitary Cooling Products (UMP) was up by 19% to Rs 525.55 crore (or 37% of total sales) driven by good demand during festival season. The segment revenue of Engineering Products (EP) was up by 10% to Rs 80.30 crore (or 6% of total sales).
• EBIT was down by 4% to Rs 127.68 crore driven by lower profit from EMP & EP businesses. While the segment profit of UMP was up by strong 67% to Rs 46.28 crore that of EMP and EP was down by 26% (to Rs 56.11 crore) and 13 %( to Rs 25.29 crore). Strong growth in profit of UMP was driven by both higher sales as well as 250 bps expansion in segment margin to 8.8%. However despite higher sales the fall in segment profit of EP was largely due to 830 bps crash in segment margin to 31.5%. The segment margin of EMP declined by 150 bps to 6.9% and that together with lower sales resulted in lower profit.

Half yearly performance

Consolidated sales were up by 14% to Rs 4075.94 crore. But with OPM dip by 20 bps to 9.7%, the operating profit was up by 13% to Rs 397.09 crore. After accounting for higher OI, higher interest, higher depreciation, the PBT was up by 20% to Rs 487.92 crore. With EO Exp stand higher by Rs 49.17 crore to Rs 49.17 crore, the growth at PBT was restricted at 8% to Rs 438.75 crore. The taxation was up by 23% to Rs 134.65 crore but the PAT was up by 3% to Rs 304.10 crore. The share of loss from associate/jv was higher at Rs 30.50 crore compared to mere Rs 1.71 crore and thus the net profit was eventually lower by 7% to Rs 273.60 crore.

Segment profit of UMP was up by 56% (to Rs 276.03 crore) facilitated by higher sales (up 39% to Rs 2274.33 crore) and higher margin. But the segment profit of EP was down by 12% (to Rs 49.23 crore) despite its sales was higher by 3% to Rs 154.26 crore as its segment margin erode sharply by 530 bps. The segment profit of EMP was down by 26% to Rs 121.67 crore hit by lower sales (down 8% to Rs 1633.45 crore) and lower margin (down 180 bps to 7.4%).

Other developments

The Board of Directors has approved amalgamation of Universal Comfort Products, the wholly owned Subsidiary Company, with the Company with appointed date of 1st April, 2019. The proposed amalgamation is subject to the approval of the shareholders and creditors of the Company, if any, and other statutory and regulatory authorities.

The Group has evaluated the option to pay lower corporate tax rate under section 115BAA of Income Tax Act, 1961 as introduced by the Taxation Laws (Amendment) Ordinance, 2019 and accordingly Voltas Limited (the holding Company) and its wholly owned subsidiary, Universal Comforts Product Limited, has opted to pay corporate tax at reduced rate effective 1 st April, 2019.The change in tax rates has resulted in a reversal of deferred tax assets of Rs 32.93 crores on account of remeasurement of deferred tax balances as at 31st March, 2019 and reversal of current tax and deferred tax charge of Rs. 22.84 crores and Rs. 0.75 crore respectively accounted for during the quarter ended 30th June, 2019 due to reduction in tax rate. The net impact of such change in tax rate amounting to Rs. 9.33 crores have been recognised in the consolidated results for the quarter and six months ended 30th September, 2019.