Rs 750 crore stuck in Qatar projects, Voltas seeks government intervention

Voltas Qatar projects: Tata Group's Voltas is grappling with a significant challenge in Qatar, with nearly Rs 750 crore stuck due to delays in realising overdue receivables and project execution timelines, according to its Managing Director and CEO Pradeep Bakshi. Bakshi said that the unethical encashment of bank guarantees by certain contractors has exacerbated the situation, hampering the international project business of the Tata Group subsidiary in the December quarter.

"Unprecedented occurrences are unfolding in Qatar, where unfortunately, our dues are not being promptly paid, and extensive delays are occurring. Despite completing and handing over projects, payments are pending," Bakshi informed PTI.

Voltas has sought assistance from the Indian government and the Embassy in Qatar regarding the issue. The mechanical, electrical, and plumbing (MEP) contractor has fulfilled its contractual obligations in Qatar but is facing challenges in getting its bills certified and paid promptly.

"We are witnessing a lack of basic business ethics in our dealings with partners... Unfortunately, payments are being withheld," Bakshi remarked. The total outstanding dues amount to close to Rs 750 crore, with an additional exposure of Rs 375 crore in bank guarantees.

Bakshi pointed out that most projects have concluded in the last six to seven quarters, resulting in significant losses for Voltas. The December quarter saw the company reporting a net loss of Rs 27.60 crore, primarily attributed to losses in the Electro-Mechanical Projects and Service segment, which reported a loss of Rs 120 crore. In FY23, Voltas had to provision Rs 106.43 crore due to contract cancellations and bank guarantee encashment.

The challenging situation is not confined to a single client, with multiple customers, including Sidra Medical and Research Centre, North Gate Mall, and Commercial Boulevard Development, contributing to Voltas' predicament.

Voltas, with a rich history spanning over four decades in project business, is experiencing such headwinds for the first time in the last few quarters, primarily due to issues in Qatar. As a remedial measure, the company is adopting a cautious approach to project selection, prioritising well-funded projects with reputable contractors and clients known for timely payments.

Looking ahead, Voltas aims to consolidate its position in the room air conditioner sector, where penetration levels remain low but are on the rise, especially in smaller towns. The company plans to invest around Rs 1,000 crore in the segment, including setting up a compressor plant and expanding capacity over the next five years.

(With PTI inputs.)