Aiming for Rs 5000 crore topline in FY16: Bajaj Electricals

Bajaj Electricals has been a marked underperformer through the year but Shekhar Bajaj, CMD of the company is very upbeat on the outlook for FY16 with a targeted turnover of Rs 5000 crore.He is very bullish on the LED lighting business where they have won order worth Rs 41 crore last month and have also received orders worth Rs 80 crore orders for Luminaires. The engineering & projects (E&P) business is also seeing an uptick, says Bajaj with a starting order book of Rs 3000 crore. The company hopes to make revenues of Rs 1800 crore from the business next fiscal, he adds.Currently, the company has shifted its focus from primary sales to secondary sales, which will bring down the inventory levels.

Below is the transcript of Shekhar Bajaj’s interview with Sumaira Abidi & Reema Tendulkar on CNBC-TV18.Reema: In order to counter the increasing presence of LED which was eating into our CFL business you all have also launched the LED business. You all did a soft launch in January can you walk us through how that has progressed? What have been the orders for LED and because of this do you think your lighting business can pose a positive growth in this quarter as well as in FY16?A: Let me start by lighting, I would like to give you two good news – there were three tenders for LED lighting required by Energy Efficiency Services Ltd. (EESL) and we were L1 and we got the order for about 40 lakh pieces worth Rs 41 crore, which we received a month back. Another LED order worth Rs 80 cr for Luminaires, we are L2 in that. So we are now very much into LED as far as lighting is concerned. As far as legacy orders we were all finished last year and whatever the receivables we made provisions for that in the third quarter. Therefore this fourth quarter you will see a substantial positive numbers as far as E&P is concerned. The other two businesses also compared to the previous fourth quarter should be better. So over all the performance in the fourth quarter will be far better than it was last year.Sumaira: Earlier you had guided for a lower EBIT in the lighting segment for FY15, given that you have got some new orders, how is FY16 shaping up and what could your order pipeline look like going ahead from here, what would you be looking forward to?A: Except for the E&P business, which will start with around Rs 3,000 crore opening for the next year, the other businesses are normally current businesses. It is unusual to get this type of bulk order in case of LED. So this order of Rs 40 crore and Rs 80 crore will be done in the next six-nine months and therefore that will all come next year. In terms of margins, in terms of percentage it is not so exciting because these are all bulk orders but it adds to your bottomline substantially.Therefore, against Rs 4,200-4,300 crore that will end up this year, next year we are clearly looking at a number of more than Rs 5,000 crore. E&P business should be about Rs 1,800 crore next year against this year, which is about Rs 1,300-1,400 crore and consumer durable business also should go  up and around double digit growth should take place both in lighting and consumer durable segment. There is aldo change in our focus in the way we are going to work. Our focus is on secondary sales rather than primary sale and therefore our inventory levels of our various dealers, distributors they are bringing them down. So primary sales may show a slight decline in growth but our secondary sale is something which would be clearly 12-15 percent even though the primary sale may show around 10 percent. For the next year we are clearly looking at Rs 5,000 crore turnover and a much better profits.Reema: Coming back to the E&P business, in the previous quarter the company made significant provisions, can you tell us if in this quarter you will also be making provisions? Last quarter there were Rs 150 crore of receivables, how much of that are you likely to recover and by when?A: The provisions were already made in Q3, so in Q4, this year there is no additional provision required. That is why I said there will be a good positive EBITDA you will see in case of E&P and next year. The legacy projects are over, the legacy outstandings, which were not receivable, we have provided for in Q3 and whatever required provisions are there have been taken care of. So, this Q4 and next year the E&P, on every quarter, should be positive.Reema: What about the receivables, Rs 150 crore of receivables, will you recover it if yes, by when?A: That will be recovered, however some of them come after 12 months after the project is handed over, some come after three-four months but what were not to be received have been provided for so there is no further provision required. It may take three months, six months, twelve months but they are all on the way of being received. Therefore, it is a cash flow, which will keep coming and in a project business it is a common situation that we end up as per the terms of payment after you handover the project, you get the last 10 percent after 12 months. So whatever is receivable and which is going to be clearly received in the next 12 months - those we have not provided for but for what we are doubtful on we provided for the same. So I don’t see any more major write-offs or any further provision that will be required in the coming year.