If demand in the domestic market worsens the immediate few quarters could be “challenging” according to Jairam Varadaraj, Managing Director of the Coimbatore-based Elgi Equipments Ltd (EEL).

The company, which manufactures compressors and automotive equipment, saw sales growing in the global markets even while domestic sales were flat in the first quarter of the current fiscal, he said.

In the quarter ending June 2013 net income from operations on a standalone basis grew to Rs 213.86 crore as against Rs 184.23 crore in the same quarter during 2012-13. Net profit edged up to Rs 21.70 crore in Q1 of the current fiscal from Rs 18.78 crore in the same quarter last year. The EPS was Rs 1.37 (share face value Re 1) as against Rs 1.19 in the first quarter last year.

On a consolidated basis, net sales was Rs 347.60 crore (Rs 227.54 crore) and net profit Rs 17.69 crore (Rs 14.9 crore).

Varadaraj said compressor sales witnessed a 23 per cent growth globally on an organic basis. He said in spite of the adverse market conditions, EEL was able to maintain domestic sales and the growth in volume had enhanced profitability.

Sluggish growth in the car market in India had impacted the expansion of workshops. This had contributed to the negative 6 per cent sales growth by the automotive division of EEL in the first quarter this year compared with the same period last year. He said the focus on new products such as the 3D wheel aligner and under-chassis washers “helped in sustaining sales to a large extent”.

He said the first quarter was a “paradox” as sales grew in the global markets while they were flat in the domestic market. He said if the “Indian market demand worsens then the remaining quarters could be challenging”.

Shares of EEL were up 30 paise at Rs 78.15 in the NSE.

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