Revenue from consumer products fuelled Q3 profit growth, says Bajaj Electricals CFO

The Earnings Before Interest and Tax for the CP segment stood at Rs 142 crore, showing a 115 percent rise over the year-ago period.

February 04, 2021 / 07:10 PM IST
 
 
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The growth in revenues in the consumer products (CP) segment helped Bajaj Electricals post a 948 percent year-on-year (YoY) growth in net profit in Q3, said the company’s chief financial officer.

In an interaction with Moneycontrol, Anant Purandare, Chief Financial Officer of Bajaj Electricals, said that the zoom in profit in the December quarter was boosted by the 34 percent growth in CP business to Rs 1,153 crore.

“The reason for profits is a combination of factors including top-line growth in consumer products and reduced overheads costs,” he added.

Talking about the reduction in overheads, Purandare said that there was a decrease in travel costs, as well as rent since the company has surrendered certain offices.

“There is a lower spend on ads and publicity in the quarter. All of this has resulted in better EBIT margins,” he explained.

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The Earnings Before Interest and Tax (EBIT) for the CP segment stood at Rs 142 crore, showing a 115 percent rise over the year-ago period. The CP operating margins stood at 12.3 percent.

“The product mix within the CP segment also helped us improve the margins. The lighting business saw an 18 percent YoY at Rs 152 crore. Appliance business grew to Rs 717 crore, seeing 36 percent growth while fans saw Rs 167 crore, showing 22 percent YoY growth,” said the CFO.

Purandare explained that the Morphy Richards business within CP saw a 70 percent YoY growth at Rs 117 crore. Global electrical appliances brand Morphy Richards is marketed and serviced in India by Bajaj Electricals.

EPC segment sees dip in business

In the December quarter, the engineering, procurement and construction (EPC) segment had a total revenue of Rs 347 crore, registering a YoY de-growth of 18 percent.

Purandare said that since the company is not bidding for new projects in power distribution (PD), sales dipped by 54 percent in this quarter to Rs 93 crore in PD business.

“In the last quarter (Q2FY21), there was a closure of projects and contingency margins were released accounting for Rs 40 crore. In this quarter, there was no closure and topline de-grew. All this impacted EPC business profitability,” he added.

The order book as on January 1, 2021, stood at Rs 1,220 crore for Bajaj Electricals. This comprised Rs 388 crore for transmission line towers, Rs 501 crore for power distribution, and Rs 331 crore for illumination projects.

Going forward, Purandare said the government’s thrust on improving road infrastructure and expansion of metro railway under Budget 2021 will create new opportunities for lighting projects under EPC.

For the nine months ended FY21, the company generated positive cashflow from operations of Rs 609 crore as against Rs 499 crore in the year-ago period. The debt reduced from Rs 962 crore in the beginning of FY21 to Rs 441 crore as of December 31, 2020.
M Saraswathy is a business journalist with 10 years of reporting experience. Based in Mumbai, she covers consumer durables, insurance, education and human resources beat for Moneycontrol.
first published: Feb 4, 2021 07:10 pm

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