LED displays and lightings manufacturer, MIC Electronics has had a disappointing first quarter. Sales have fallen in both its LED segment and Infotech and Communications business.

In an interview with CNBC-TV18, V Muthuswamy, COO, MIC Electronics, spoke about the company’s performance in the quarter and the road ahead.

Here is a verbatim transcript of the exclusive interview with V Muthuswamy on CNBC-TV18. Also watch the accompanying video.

Q: The numbers were a disappointment both in your LED segment and in your Infotech and communication segment, sales fell, LED they fell about 29% year on year and Infotech has fallen even more sizably by about 65%. What went so wrong?

A: The usual market sentiment plus in the first quarter we had capitalised some of our production. We capitalised about 12 screens; we had produced and used for captive use. We have now deployed it in Delhi for the Municipal Corporation of Delhi (MCD) market. We had a big order from MCD for 50 screens, which are being deployed there in various places like Saket, Greater Kailash and all that.

That is going to get us revenue of close to about Rs 18 crore per year because that was a different kind of screen. So we had concentrated the production on that. That is why you will see a fall in the first quarter. This will pick up from the second quarter onwards. This year I think we should be ending between Rs 360 crore and Rs 400 crore with a profit margin of close to about Rs 70-80 crore.

Q: Is Rs 360 crore to Rs 400 crore in terms of sales?

A: Yes in terms of turnover our figure is likely to be somewhere between Rs 360 crore and Rs 400 crore and our net profit could be in the range of Rs 80 crore.

Q: In Q2 you have done just about Rs 56 crore, so you are saying that in Q3, Q4 you will be able to make up for that or maybe able to double that?

A: Yes, we are picking up now. For instance in LED lighting, all this initial phase of convincing is over. LED is a conceptual sale. We have to sell the concept first because it is a totally new technology. We have done that. We have got a lot of pilot orders. Plenty of pilot orders have come from companies like India Oil, PSUs, Mahindra and Mahindra, Sun TV, Maruti, Railways, Dehradun Municipal Corporation, TVS etc. Many orders have come. These are only probably 0.5% or 1% of the requirement. So, many orders are now coming in.

So, these are all going to pick up. Our lantern sales are picking up now. We are likely to sell over 100,000 lanterns this year to Indian Oil and to TERI. So that will be a very big focus for us this year. So the lighting market is just picking up. So, we will do very well during this year.

Q: How about margins because your interest cost have gone up year on year?

A: Whatever is the principal, we are paying it back and the interests are getting into the profit and loss account. We expect that we will keep a net profit of about 25%. We are very confident of that because we have got full control on the technology and all the products are manufactured in-house. We have got about 160 people in design alone. That is our strength. We do outsource some part of it. We do die casting and trays ourselves and some of the moulds we keep it ourselves, and some of this we get it done outside. So because of that we are looking into the cost very closely and our cost will further come down.