Bajaj Electricals sees pickup in E&P business from FY14
Bajaj Electricals expects a pickup in engineering and products business, which has been hit by the overall slowdown in infrastructure spending, beginning next financial year, following a clean up of its existing orders, which have seen a significant cost over runs, joint MD Anant Bajaj told moneycontrol.com on Thursday.
October 26, 2012 / 16:56 IST
Nachiket Kelkar
moneycontrol.com
Bajaj Electricals expects a pickup in engineering and products business, which has been hit by the overall slowdown in infrastructure spending, beginning next financial year, following a clean up of its existing orders, which have seen a significant cost over runs, joint MD Anant Bajaj told moneycontrol.com on Thursday."There are several sites that didn't close on time and that led to excessive cost over runs. We decided once and for all to clean up old orders...So by the end of this financial year, from 24 we will just have 6 sites, apart from new projects...So in my view, Q3 should be the last quarter of further hits on our E&P business," Bajaj said.The company will also be very stringent and careful when accepting new orders and will only bid for projects that offer higher margins among other things, he said.Earlier in the day, Bajaj Electricals reported a second quarter net profit of Rs 27 crore, up 8% year-on-year as losses in the engineering and projects business were offset by one-time profit from sale of investment and lower tax expenses.Profit before other income, finance costs, taxes and exceptional items slumped 59% to Rs 21 crore, sending its shares down over 5%.The home appliance maker's net sales for the July-September quarter were up 5% from a year ago to Rs 733 crore.Bajaj Electricals had an exceptional profit of Rs 25 crore on sale of its entire shareholding in Bajaj Ventures in Q2.Its sales from E&P business declined 22% to Rs 133 crore, while it reported a loss of Rs 27 crore, compared with a profit of Rs 7 crore in the year ago quarter.Bajaj is confident that with the clean up of its order book, the company will see strong growth in E&P business again from Q4 or early next year. He expects the company's order book to top Rs 1,000 crore by March-end, from Rs 891 crore now.In fact, Bajaj said that the company was close to winning a world bank backed government project and expected to win several other projects, by March.Among Bajaj Electricals' other businesses, the company's sales from consumer durables rose 17% to Rs 399 crore while profit rose 12% to Rs 37 crore. Its sales in lighting business rose 7% to Rs 202 crore, while profit was flat at Rs 13 crore.However, EBIT margin in consumer durables declined to 9.3% from 9.5% and in lightings it was down to 6.5% from 6.9%, last quarter, due to commodity price volatility and exchange rate fluctuations.Overall consumer durables have seen a slow offtake than usual amid the overall economic slowdown and high inflation. Bajaj said that while sales during the Onam festival in Kerala were poor, Navratri saw decent sales. All eyes are now on the Diwali festival next month, which the company hopes will boost sales.Further more, with the winter season around the corner, Bajaj Electricals hopes demand will pick up for products like water heaters and room heaters.Meanwhile, Bajaj said that the company has shortlisted several locations near Mumbai for its planned research and development centre.Bajaj Electricals is setting up its own centre, which will integrate all the R&D across its various verticals under one roof. The aim is to save costs and develop innovative products in future.The centre is likely to be ready by the end of the year.Bajaj Electricals shares closed down 4.4% at Rs 214.70 on NSE on Thursday.nachiket.kelkar@network18online.com Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
