BAJAJ ELECTRICALS

Message

   Conference Call      

          Bajaj Electricals 

Expects E&P to clock a PBIT of Rs 40 crore (flat yoy) in Q4FY12 

Bajaj Electricals held a conference call on Feb 6, 2012. In the conference call the company was represented by Shekar Bajaj, Chairman, R Ramkrishnan, Executive Director and Ananth Purandare, CFO. 

Key take aways of conference call

Engineering & Projects order inflow during 9mFY12 is Rs 550 crore and the order backlog is Rs 783 crore as end of Dec 31, 2011. Of the order backlog about Rs 288 crore is of TL orders, Rs 200 crore is order for highpost and Rs 343 crore is of special projects. 

Sales of Consumer Durables grew by 24% for the quarter ended Dec 2011. In that the sales of appliances business was up by 29% and that of fans was up by 14%. Similarly the sales of lighting business was up by 18.8% for the quarter of which lights grew by 25.7% and that of luminarie was up by 11.2%. On the otherhand the Engineering & Projects degrew by 5%. 

Sales of Engineering & Projects for 9MFY12 grew by modest 2% but its PBIT was lower by 84% to Rs 5.34 crore. The company expected things will start improving from Q3FY12 but that has not happened and the company will complete about 5-6 projects by Feb 2012. This impacted the revenue and profits. Subdued profits in 9mFY12 was largely on account of absence of adequate revenue to cover the fixed cost of this business. 

Engineering & Projects is expected to clock a PBIT of Rs 40 crore in Q4FY12 (same as that clocked in Q4FY11) and a segment revenue of Rs 375-400 crore in Q4FY12. This is factoring in any write-offs expected in completing long pending orders. 

The company expects a E&P turnover of Rs 850 crore (up 5% yoy) for FY12 and about Rs 1000 crore for next fiscal. 

The company that has clocked a sales of Rs 2039 crore for 9mFY12 expects to end the fiscal with a sales of Rs 3200 crore. For next fiscal the company expects a sales of Rs 3800-3900 crore. 

To achieve Rs 1000 crore of revenue for E&P next year the company need to end the fiscal with a order backlog of Rs 1200 crore. 

Margin pressure in Consumer durable segment for the quarter is more related to Fans. Moreover with commodity prices and forex losses aggravated the pressure as this division has significant imports. Forex loss was Rs 2.5 crore. The PBIT margin of Consumer Durables increased from 9.3% in Q2FY12 to 11.1% in Q3FY12 and the company expects to maintain Q3FY12 margin in Q4FY12 as well. 

Debt as end of Dec 2011 is Rs 257 crore and this is largely made up of working capital loans. 

Advertisement spend in 9mFY12 is Rs 37 crore and this is substantially higher than Rs 30 crore spent in entire FY11. Planned advertisement spend in FY13 is about Rs 55 crore. 

Fans – when the industry degrew by 8% the company's fan sales grew by 10.6% for 9mFY12. 

Fan sales revenue in Q4FY11 was approx Rs 190 crore. 

If there is lack of in house orders the company's galvanising unit is taking up job works to have capacity utilisation.