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Last Updated : May 24, 2016 02:04 PM IST | Source: CNBC-TV18

To sustain revenues from lightening biz in FY17: Eon Electric

The company will also hope to sustain its bottomline growth at 35 percent, says Vivek Mahendru, Executive Director of Eon Electric.

Eon electric earned Rs 32 crore from its lighting business alone in the fourth quarter of FY16. The company, said Vivek Mahendru, Executive Director of Eon Electric, plans to sustain such numbers in FY17.

Mahendru also hopes to sustain bottomline growth at 35 percent.

Eon did not do very well in its cables business, reporting a decrease in revenues in its cable business at Rs 9.9 crore in the fourth quarter of FY16 as against Rs 15 crore in the same period a year ago.

Below is the verbatim transcript of Vivek Mahendru’s interview with CNBC-TV18's Nigel D'Souza and Reema Tendulkar.

Nigel: It looked like a very good quarter. A good improvement, the lighting business again doing fairly well. At around Rs 32 crore is what you recorded for the past quarter. Are we likely to see more of the same revenue of around Rs 30 crore. The last time you joined us you were telling us there are more contracts that are coming in. Has that come about?

A: Delighted to share that yes, we are on track as we had mentioned last time. The future is looking good.

Nigel: What about the revenue, going ahead lighting revenue is currently at Rs 32 crore, what you did for the past quarter. Going ahead can we maintain this run rate, can we up it to around Rs 40 crore per quarter?

A: As you know first quarter of any financial year is a little slow. But we should be able to maintain this and sustain the same. That will be a win for us.

Reema: Is there scope to improve your margins because while your revenue growth is quite good you are still operating at very low single digit margins. What is the outlook on that?

A: We believe that with our in house value engineering that we are doing on products definitely the margins will improve and we have done well in the last quarter once again and we have sustained and shown better profits and going forward by managing our costs is the same. Marginal improvement also in revenues it improves the bottom-line.

Nigel: Let us talk about the business that is not doing well, the cable and the wires business. There in fact we are seeing that the revenues have come down. You are indicating that you are looking to shift focus in that particular business. What is the outlook going ahead, are you looking to completely wind down that business because it is still giving you earnings before interest, taxes (EBIT) losses of close to around Rs 3 crore in the past quarter itself?

A: That is right. Our conscious decision was to focus more on higher margin products because that is what will bring us out of the red and I am glad that the strategy has paid off in the last three years. Wire and cable has been a good product. If you see four years ago we did Rs 150 crore on that product. So, that product has a good acceptability. It has a good potential to grow and now that we are out of the red and we are focussing on this certain amount of attention will go to the wire and cable business and we would bring down the losses over there which will help the overall performance.

Reema: When do you expect the loss in the cables business to come to an end? It is at Rs 3 crore in Q4.

A: This year we should be on a neutral basis on that.

Reema: So, FY17 cables should not be loss making, at least at the EBIT level, right?

A: Definitely, that is the endeavour. But our focus is lighting and that is where we shall see that we make the most of it for the organisation.

Nigel: You are talking about a lot of positives. Maybe the cables business we will get out of losses, you are talking about lighting business, we should do well over there. So, for FY17, on the topline what kind of a number can we look at? On the bottom-line you will guide us for a positive number over there?

A: Definitely I believe that we should be able to. We see and our wish is to sustain the growth rate that we have set up for ourselves the last year. Last year we grew by 35 percent, we hope to sustain that.

Nigel: Rs 230 crore to around Rs 250 crore is what we could do?

A: I don't think it will be fair for me to put a number to it. But definitely we are wishing to sustain our growth rate. That is how we see it and that is what our strategy is.

Reema: Just one word on the order book, both for the lighting as well as the cable business and what is in the pipeline?

A: Definitely this is there but last year if you will notice we got a growth rate of 11 percent from our consumer durables and we believe that that product line holds a big promise for us.

Nigel: Your balance sheet, how is it looking. You have some debt, what is that exact number and are you looking to wind it down, are you happy with debt on these numbers?

A: The thing is that we are a growing organisation and therefore we are looking forward to bank supporting us so that the growth rate can be sustained. Growth will come in when there is more working capital.

Nigel: What is the debt number currently, what can it go to?

A: Our effort is that we should generate some from internal accruals and there will be a certain amount that will be required for growth and putting in a number on it as of today is hard, it wouldn't be fair.

First Published on May 24, 2016 01:04 pm
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