Schneider Electric Infrastructure hosted a conference call on Nov 28, 2017. In the conference call the company was represented by Prakash Kumar Chandraker – Managing Director, Arnab Roy - Chief Financial Officer and Vineet Jain – Investor Relation
Key takeaways of the call
Order intake in Q2FY18 at Rs 233 crore was up 4% yoy. Of Q2FY18 order intake, the transactional business accounts for 58% and 11% by services and balance by systems.
Market continues to be challenging despite Government of India pushing for investment revival. Of the market segment the company has presence only segments such as power utilities especially areas such as reliable power supply, grid management, O&M cost reduction; data centres; CIB (institutional building, convention centres & premium housing complex) and Metro rail are exhibiting positive momentum. Key segment such as Oil & Gas (uninterrupted down for critical processes as well as R&M) and MMM (only cement is showing some positive trend) is sill subdued. Not expects strong revenue growth to happen in short term for the company. Strong top-line growth is expected only when there is strong investment revival in Oil & gas and MMM segment.
Trends in renewable energy generation continue to be positive. Digitization is most focus area for utilities as well as city administrators.
Q2FY18 sale was impacted due to slower sales pickup on account of GST PO amendments. Significant sales that was due for Q2FY18 was shifted to Q3FY18. Thus there won't be any impact for full year.
Business mix is progressing in line with the rebound strategy of the company. On transactional and services business is concerned the company continue to focus on profitable businesses and expand key go to markets. In Transformer & end to end project business division the focus is to transform business models of the company and refocus on profitable growth opportunities through selectivity. In advanced grid solutions the focus of the company is to drive leadership in new grid domains and innovate.
For smart city opportunities the company has strong synergies with the group companies. The demand of one smart city will be different from other. On smart city value chain surveillance systems, building management systems and water management equipments come from group companies.
Tapping selective growth opportunities in transformer is not materializing due to flat growth in key market segments of O&G and MMM.
Other income in Q2FY18 was higher on account of collection from debt written off earlier amounting to Rs 8.2 crore. This is written off four year ago.
New products apart from bringing incremental revenue are also helping to absorb fixed cost of the plants. Easypact EXE and inductor are for exports. Easergy T300 is key component for smart power distribution for new Raipur smart city.
Material cost on account of productivity actions and better mix
Most of the products of the company are in 18% bracket of GST right now. System integrators, distribution utilities that are buying substandard products from local manufacturers are turning to organized players under new tax regime.
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