Key takeaways

Lower EBITDA margin for the quarter is largely due to non passing of incremental material due to increase in price of raw material to customers immediately. There was sudden rise in copper price in November 2016 and the company could not pass on this incremental cost to customers immediately in Switchgears business. But starting Jan 2017 the additional cost on account of copper price hike was passed on to customers.

Wire and cable - as the price increase happened only for part of the quarter i.e. two months of Nov-December period, the volume have grown definitely.

The new 3-phase dry transformers plant set up at a cost of Rs 25.5 crore started commercial production. The company started invoicing from January 2017. There is no cost escalation due to 6 months delay in completion of this project.

In energy efficiency services it secured an order worth Rs 18.7 crore from EESL for Design, manufacture, supply, install, commission, test and maintain Lighting Controls for installed LED street lighting systems for Varanasi (UP), Jalna (Maharashtra) and Jharkhand. It is a 5 year contract.

Industrial Switchgears – The company will close the year with similar or slightly better rate of growth compared to 9mFY17. But with Dry transformers start contributing to revenue starting next fiscal (expected a revenue of Rs 15-18 crore in FY18) there will be further push in next fiscal.

Dry type transformers - This product have huge potential in segments like renewable power, railways and defence sectors. The company expects at least a market share of about 5% in 3 years time for this product. Dry type transformer market in India for this product is growing at about 10-11% in the last 2-3 year.

Capacitors – the plant will go on-stream in Q2FY18. The company is going to produce only power capacitors. Indian market for power capacitor is growing at a CAGR of 15% a year. This market is highly competitive market but the company wants to leverage its distribution network.

The company is already a preferred supplier for GE Energy and that was extended to GE Transportation (formerly Alstom). This GE Transportation opens up far greater opportunism for supply of railway products of Alstom both in Indian and overseas.