EPC segment saw a 157 percent year-on-year growth in revenue in Q3
Consumer durables firm Bajaj Electricals posted a 73.5 percent year-on-year jump in net profit in Q3, its bottomline driven primarily by the Engineering, Procurement and Construction (EPC) business.
In an interaction with Moneycontrol, Anant Purandare, CFO, Bajaj Electricals talks about the December quarter numbers and the factors that boosted growth. Excerpts:
The profits jumped 73.5 percent in the December quarter. What drove the growth?
We saw a jump in both the EPC as well as the consumer products division. However, EPC has grown substantially (157 percent) because of the execution of the Uttar Pradesh orders. It is a short tenure, big value order.
The bottomline growth was driven primarily from the power distribution projects in UP. However, consumer products did not lag behind and saw a 27 percent jump in revenues as well as an improvement in margins from 6.5 percent to 7.3 percent.
EPC margins saw a slight dip. What was the reason?
The EPC margins dipped by 0.3 percent. Since there is a huge topline growth, margins should have expanded significantly. But it did not happens because in the UP projects, the bidding margins were not very high. Only because of our operating leverage, we have been able to maintain our margin at 5.6 percent.
How did the festive demand pan out for the company?
The festive demand was positive for the company and appliance business grew by 42 percent. For products like water heaters, winters are the high demand season, though for others like fan it is not big from a sales perspective so it grew by around six to seven percent. Also, we have taken some price increases of around 100 basis points.
Are there any EPC orders in the pipeline?We have not really bid for any new order in this financial year, as we want to focus on completing the UP projects properly.