Voltas Ltd is the global airconditioning and engineering services provider for the TATA group.
For FY 12, their revenues were flattish-Rs.5175 Crores as compared to Rs.5177 Crores last year.
However their Net Profits took a huge hit-Rs.162 Crores as compared to Rs.352 Crores last year.
One big reason for falling profits despite flattish sales is an “Onerous Contract”
Voltas is executing around 1000 Crores of work for the Sidra Medical and Research Centre Hospital Project in Qatar.There have been significant upward revision in the estimated cost due to design changes and delay in execution.
As per their press release,
“There have been several impediments and constraints arising from delay in designs,frequent changes in architectural/interior layouts,ceiling height restrictions and abortive engineering /rework.Uncertainties exists on variations/additional revenue claims and costs to come till the completion of the project due to the complex nature of the ‘design and build’ project , changes in the design still made by the client and delay in completion of this project.”
Hmmm…is this corporate speak for “We don’t know when this nightmare will end and how much it will cost us !!”