Targeting Rs 1,500 cr revenue in FY15: Bajaj Electricals

Below is the transcript of Shekhar Bajaj’s interview to CNBC-TV18’s Latha Venkatesh and Sonia ShenoySonia: Bajaj Electricals is in focus after the company secured fresh orders worth Rs 518 crore in the engineering’s and project (E&P) division. Can you take us through this order that you have won, what kind of margins will you be enjoying in this order and what will the total order book look like now?A: This is an order for Rs 518 crore, it is all power distribution. This is basically rural electrification project, the entire Rs 518 crore order is from Madhya Pradesh and it is spread over Jabalpur district. Total eight orders are there, only one order is from Morena which is in Bhopal district. All eight orders are rural electrification projects. With this our order book is coming to Rs 3178 crore as on September 13.

Latha: Are you noticing a turnaround at all in the order generation space?A: Actually we are now putting a stop, the orders are coming in too fast for our liking. We want to do a good execution so therefore our order book has now crossed Rs 3000 which is the highest ever and we have to make sure that we do a good execution. Therefore now we are slowing down in taking new orders because these are all old orders which we had participated in, most of them have been converted into orders which we have got. Last month we got an order for Rs 602 crore and another Rs 518 crore has come. For us getting orders is an easier position, to execute them properly, profitably is more important and therefore to that extent the more the orders, the more is the pressure to do our job. Latha: What is the guidance that you all had guided FY15 growth at 25 percent, would you do even better?A: This whole cycle is about 24 months is the order book, any thing from 15 to 24 months. So with the result that for the current year I think Rs 15 crore guidance is the 25 percent growth from Rs 1150 crore to Rs 1470 crore. I would say we will go to Rs 1500 crore which is our 26-27 percent growth is what I would still like to do a good execution and therefore next year we start with a good order book and therefore to that extent next year also we can be assured of a good turnover.

Sonia: In the quarter gone by your E&P EBIT losses had actually reduced substantially from Rs 26 crore to Rs 6 crore loss. Can you give us an indication of when you will be able to break into the black?A: The second quarter also may be slightly weak. We have done Rs 218 crore last quarter, we should do about Rs 280-300 crore in this current quarter so we will do about Rs 500 crore in the first half and we are looking at another Rs 1000 crore in next half. So therefore with the same overheads if we do double the sales, just imagine the major contribution in profitability is going to come in Q3 and Q4. Sonia: What kind of margins will you enjoy on this particular order win?A: I cannot tell you a number because as soon as I tell you the number the competitor will know what margins we work at. So this is not something we discuss but we are here to make profit and therefore if it doesn’t meet our minimum criteria we are not going to participate that is all I can say. All these orders that have been taken, we take out minimum criteria. Latha: Are cost pressures abated and will you see growth in CFL, you saw their contraction?A: CFL we continue to have weak performance, even in the second quarter it is not improving. But Luminous is doing okay so therefore overall lighting segment should be compared to last year which I mentioned earlier also, should be equal to last year or a little better but the consumer durable is really picking up well in terms of margins and top line. So that will be substantially better than last year for the year.