Bajaj Electricals posted an 84.5 percent year-on-year (YoY) dip in its December quarter (Q3) net profit at Rs 9.37 crore. This was primarily due to a hit in its engineering, procurement and construction (EPC) business.
The EPC business posted a Rs 13.84 crore loss compared to a profit of Rs 78.99 crore in the year-ago period.
For Q3, the company saw a 40.7 percent YoY drop in sales to Rs 1,283.86 crore.
In the quarter under review, the consumer products segment saw a 12.7 percent YoY growth in total revenue to Rs 860.21 crore. On the other hand, the EPC segment saw a 69.8 percent YoY drop in revenue to Rs 423.45 crore.
On a sequential basis, the company saw an improvement in net profit. In Q2 FY20, Bajaj Electricals had posted net loss of Rs 32.42 crore.
In November 2019, ICRA had downgraded its credit ratings considering a significant decline in profitability of the company's EPC business, particularly orders in rural electrification and the subsequent weakening in its debt coverage metrics.
Shekhar Bajaj, Chairman and Managing Director of Bajaj Electricals, said, "We continue to drive growth in our consumer products segment while adopting a more risk-calibrated approach for the EPC segment with a focus on completion of existing projects in hand."
Consumer products segment has registered a 12.7 percent growth in topline, while the EPC segment registered a planned de-growth due to selective bidding for fresh contracts.
In the near term, Bajaj said this will continue to impact profitability, but added that the company remains confident about a healthy bounceback as the strategic shift plays out.
The order book as on January 1, 2020 stands at Rs 1,742 crore, comprising of Rs 726 crore for transmission line towers, Rs 860 crore for power distribution, and Rs 156 crore for illumination projects.