Aug 07, 2013, 11.37 AM | Source: Moneycontrol.com
The Mumbai-based company reported a 54 percent rise in Engineering & Projects business revenue at Rs 189 crore. However, E&P loss more-than-trebled to Rs 26 crore.
Bajaj Electricals on Tuesday said its net profit in the first quarter plunged 95 percent year-on-year to Rs 0.66 crore as loss from engineering & projects (E&P) business more than trebled.
The company's total income in April-June was up 17 percent from a year ago to Rs 783 crore.
Mumbai-based Bajaj Electricals has been facing severe pressure in the E&P business for over a year now amid the overall economic slowdown.
Last quarter, revenue from E&P business surged 54 percent to Rs 189 crore, but that seems to have come at the sacrifice of profits. The company's loss from the E&P business widened to Rs 26 crore from a loss of Rs 7 crore in the year ago quarter.
The company has had to make provisions and spend money to speed up and complete old delayed engineering projects, where revenue anyways was lower and that has hurt earnings, Anant Purandare, CFO, told moneycontrol.com in an interaction.
"We are doing provisions for old receivables regarding old projects, which are delayed and we are in process of completing those. At the same time we have to spend money to see that these projects are completed as fast as possible. So lot of expenses are happening on that front," he said.
Bajaj Electricals has been closing delayed projects, where costs have escalated, for some time now and Purandare says the company will end most such projects by September and the remaining 1-2 by December, post which one should start seeing a pickup in earnings in the E&P business.
The company's order book in E&P business currently stands at Rs 920 crore, which includes Rs 292 crore for transmission line towers, Rs 92 crore for high-mast and lighting posts and Rs 536 crore for special projects.
Apart from the E&P business, the lighting business too is seeing slow growth. Revenue from lighting business was up 3 percent to Rs 157 crore in April-June and profit gained only marginally to about Rs 8 crore.
Purandare said that the consumer lighting business grew 6.5 percent last quarter, but there was little de-growth in luminaries (industrial lighting).
"There is a demand side issue. There has been a slowdown in industrial lighting. Also one of our vendors could not supply us on time due to labour availability issues in April and May. That delayed some orders," he added.
Meanwhile, Bajaj Electricals is seeing good growth in the consumer durables space. Fans and coolers were in good demand last quarter and Morphy Richards too saw a pickup in growth, according to Purandare.
Revenue from consumer durables gained 12 percent to Rs 437 crore in the first quarter and profit was up 21 percent to Rs 40 crore. Growth is expected to pick up further in the upcoming festive season, he said.
Purandare feels the upcoming festive season could be a "right time" to hike prices to pass on the burden due to the rupee depreciation. The Rupee hit a life low of Rs 61.80 on Tuesday.
In consumer appliances, around 20 percent of the total content is imported, while 4-5 percent of components in fans and lighting are imports. The company already took 3-5 percent price increases in the last quarter.
Bajaj Electricals shares hit a 52-week low of Rs 155.25 on NSE on Tuesday. The stock closed down 9.6 percent to Rs 161.