Back

Analyst Meet / AGM - Analyst Meet

Expects strong sales growth and better margins for FY'14

Crompton Greaves

25-May-2013, 12:16
The company held its Analyst meet on 24^th May'13 and was addressed by MD and CEO Mr. Laurent Demortier
Key highlights

Orders received during the Q4 FY'13 quarter was up by 3% y.o.y to Rs 2983 crore. Order back log as on Mar'13 stood at Rs 9126 crore as compared to Rs 8366 crore for Mar'12.
FY'13 total orders inflow stood at Rs 10544 crore, up by 3% y.o.y. Thrust has been given on export orders particularly in Middle East and Africa. Orders intake has higher and have better margins.
According to the management, careful control and selection of order intake for Power Transformer business has been done and all the orders are on track.
During FY'13, restructuring of Belgium operations was completed and Hungary capacity operations were ramped up. The Belgium restructuring costs resulted in one time impact of Rs 121 crore towards payment towards employees.
On geographical basis, orders from EU, Asia Pacific and USA was down by 11%, 12% and 8% respectively to Rs 2378 crore, Rs 356 crore and Rs 1681 crore, while orders from India, MEA and Asia Pacific region, was up by 1%, 230% respectively to Rs 6369 crore and Rs 1784 crore.
On segmental basis, orders received from Power segment was more or less flat during Q4 FY'13 at Rs 2451 crore. The company reported a segmental loss in the quarter largely due to the restructuring activities undertaken globally. As per the management, the restructuring is complete and the orders in hand have better margins.
Similarly on annual basis, for FY'13, the orders received from Power segment were down by 1% to Rs 8397 crore and the segment reported a loss of Rs 110 crore at EBIT level, largely due to restructuring of product line which constitute about 41% of power revenue. Management was able to get the breakthrough in some renewable wind offshore orders.
Company's first 1200 KV transformer started operations in Bina during FY'13. CG also received its first smart grid order for electrical transportation.
Orders received from Industrial segment, during Q4 FY'13, grew by 20% on y.o.y basis to Rs 531 crore which was driven by growth in Drives sector. Margins were also better due to better execution.
For Industrial segment, For FY'13 as a whole, the orders were up by 20% y.o.y which was largely driven by drives and railway business. However the revenue grew by only 1% y.o.y for the year as continuous slowdown and delay in capex, hampered the growth.
New manufacturing facility for large motors got commissioned in Bhopal in FY'13. New drives factory in Mandeedip to get commission from June'13 onwards.
Margins in the consumer segment got impacted due to additional marketing and distribution costs and more institutional orders during FY'13. The company added 46 new distributors and 2400 new retailers in past couple of months and is in continuous process of increasing its reach.
CG became first company to cross Rs 1000 crore of revenue from fan business. During FY'13, company launched compact and efficient geysers, submersible pumps, LED lights and entire range of kitchenware segment.
Management has laid down strategic initiatives on various divisions. For FY'13, for Power segment, through globalization of sourcing for 7 key commodities, company was able to save 100 bps at Ebidta level. Through the sale of higher KV transformers and higher EHV and UHV sales, the ebidta improved by 90 bps. Hungary unit reported positive Ebit in Q4 FY'13. Management expects the exercise to continue to result in further margin improvement in FY'14.
Going forward, for FY'14, management expects strong FY'14 sales growth largely driven by solid order book. Order intake is further expected to improve driven by higher value added segments namely from UHV/EHV in Asia, Smart grid orders in power segment, Railway orders and drives orders from Industrial segment and higher distribution channels expansion resulting in better reach and orders for consumer segment.