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Bajaj Electricals on Tuesday posted a 84.51 per cent drop in consolidated net profit to ₹9.37 crore in the third-quarter ended December. It had posted a consolidated net profit of ₹60.52 crore in the year-ago period.
Anuj Poddar, Executive Director at Bajaj Electricals, attributed the decline in consolidated net profit to a degrowth of 69.8 per cent in its engineering, procurement and construction (EPC) segment this quarter compared to year ago quarter. This is because Bajaj Electricals has stopped taking orders for last mile power distribution projects — which had contributed more than three-fourths in revenue to the EPC segment until FY19 — because of low returns on capital business, as well as various challenges relating to the projects, he said. The company has taken a conscious call to focus more on the consumer products segment, he said. The move seems to have been well received as the company’s shares were up by nearly 10 per cent at close on the BSE at ₹411 on Tuesday.
The finance cost of the company increased to ₹39.7 crore in the quarter under review compared to ₹33.8 crore in the corresponding quarter last year due to increased borrowings, Poddar said.
Total income from operations during the quarter stood at ₹1,283.86 crore (₹2,164.49 crore), a 40.68 per cent dip.
“We have been pursuing our stated path of a strong focus on positive cashflow from operations, reducing our debt and strengthening our balance sheet. I am glad to note that we have done well on all of these parameters and remain committed to it. We continue to drive growth in our consumer products segment while adopting a more risk-calibrated approach for the EPC segment with a focus on completion of existing projects on hand,” said Shekhar Bajaj, Chairman and Managing Director, Bajaj Electricals.
During the third quarter, the consumer products segment clocked total revenue of ₹860.21 crore (₹763.23 crore), a growth of 12.7 per cent. On the other hand, the EPC segment registered a total revenue of ₹423.45 crore (₹1,401.18 crore), a de-growth of 69.8 per cent, the company said.
The EPC segment has registered a planned de-growth due to selective bidding for fresh contracts, according to Bajaj.
“In the near term this will continue to impact profitability, but we remain confident about a healthy bounce back as our strategic shift plays out,” he said.
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