As President Corporate Affairs and Chief Financial Officer, Anil George has played a key role in managing the running of Voltas since 2010. He is one CFO who managed liquidity in challenging market conditions and ensured sufficient cash flows in Voltas, India’s largest indigenous air-conditioning company, and one of the world’s premier engineering solutions providers and project specialists.
Under George’s financial management, Voltas’s sustained its No.1 position and further improved its market share to 21.8 per cent. The company also saw its cash position bump up by Rs 128 crore by way of increased cash and liquid investments over and above Rs 954 crore in FY2014.
Although he came from an FMCG background, it did not take long for George to come to grips with an extensive range of concerns that surrounded the projects business in 2011, both in the domestic and Middle East markets. “Externally the business environment was fast deteriorating, good projects were hard to come by, execution delays were common, cost escalations aplenty and commercial disputes a regular phenomenon. Unless and until claims and variations were agreed upon and promptly settled, profits remained a mere accounting assumption. In truth, receipt of cash was the ultimate and only reality,” says George.
He cites the example of Sidra hospital in Qatar as one such contract. This contract required creating a cumulative loss provision in excess of Rs 600 crore. “At the same time, the bleeding elsewhere had to be forcibly stopped, while dues and outstandings across several projects were followed through with extraordinary vigour,” says George.
The finance and commercial function led by George was brought centre stage to ensure better documentation and ironclad contracts well prepared for every contingency, thus strengthening systems and control processes including those meant to evaluate future ‘cost to come’ and forward profitability.
In 2011, a corporate call for austerity began, led by the finance function. A series of hard hitting measures were taken by George as resource productivity was on top of his mind. “Each recruitment underwent close scrutiny — could we outsource, could we work smarter, could we leverage technology? The proof of the pudding is of course in the eating and the company has over the past five years, consistently underspent and saved on its non-operational costs. At the same time, non-productive assets were also systematically identified and monetised,” says George.
Today, the dividend yield is 0.8 per cent at a payout ratio of 22.6 per cent of consolidated net profit. The market cap stands at Rs 7,654 crore, and the revenue of the company in FY14 was Rs 5,183 crore. Further, borrowings specific to overseas projects were reduced substantially in FY’14 from Rs 263 crore to Rs 122 crore at a consolidated level.
