Bajaj Electricals is hopeful of seeing a turnaround in their engineering & projects (E&P) business segment in FY15 after completion of all their earlier projects said joint MD Ananth Purandhare in an interview to CNBC-TV18. For the last many years the company has posted losses from that segment.
The company is confident of clocking a 22 percent revenue growth for FY14 and similar growth in FY15 too
Bajaj Electricals is Indian consumer electrical equipments manufacturing company based in Mumbai, Maharashtra. It is a part of the Bajaj Group.
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Below is the interview of Ananth Purandhare, Jt MD, Bajaj Electricals with Latha Venktatesh and Sonia Shenoy on CNBC-TV18.
Latha: How do you see in the first place the rural markets panning out? We have seen some soft numbers coming in from some rurally oriented companies like Dabur and even for that matter Mahindra & Mahindra Financial Services (MMFSL) which sells loans to rural markets. How has been your experience with demand - both rural and urban?
A: As far as consumer durable business is concerned there is a slowdown on the demand, it is visible. In the last quarter we could not achieve our target, so definitely there is slowdown.
Sonia: The big worry for the stock has been the continued losses that you have seen in the engineering & projects (E&P) business and many analysts who we have spoken to believe that only once you turnaround this business is when the stock can see a significant rerating. Can you give us any kind of timeline on how much time it would take for the E&P business to start making profits?
A: We started the engineering project division around a decade back and it was growing at around 40 percent till 2009. We took lot of projects for transmission line towers, plus rural electrification. In FY10, we found that there are a lot of things messed up at site level and we started putting more costs for completing those projects and so the margins for that division started sliding down and in FY11, we was see it making losses. The loss was to the tune of Rs 125 crore last year. To curb these losses, we though of slowing down our order intake.
So, in FY12-13 we did not taken new orders and focused on completion of the projects on hand. So because of that we have taken a very big hit on the bottom-line. We are now on the verge of closing most of these projects. Very few are there which would be getting closed in the fourth quarter of this financial year and we have decided that FY14-15 should start with very clean platform for the E&P business.
Sonia: You do not see any profits within FY15, right? You will expect it to take some more time before it turns into the black?
A: Most of the things will get over in FY14. We are very confident that we will turnaround in FY15.
Latha: What kind of growth are you seeing in FY15? FY14 you maintained your 25 percent growth forecast?
A: FY14 we will grow at around 20-22 percent. FY15 we are also expecting similar growth. The consumer facing businesses is around 15 percent and EPC is likely to grow by around 35-40 percent.
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