Kirloskar Oil Engines hosted a conference call on Oct 27, 2017 to discuss the performance of the company for the quarter and half year ended September 2017.
Key takeaways of the call.
Q2FY18 witnessed sales from agricultural segment plumment by 23% to Rs 97 crore as offtake is hit by GST uncertainty, flood situation in major states and non availability of subsidy. Similarly the sales of large engines and customer support was lower by 15% (to Rs 24 crore) and 9% (to Rs 83 crore) respectively. However the sales of PowerGen and Industrial was higher by 6% (to Rs 309 crore) and 13% (to Rs 130 crore) respectively. Growth in powergen in Q2FY18 was largely due to bulk telecom order as the market in Q2FY18 slowed down as per seasonality and deferment of orders by real estate business in view of GST and RERA compliance. The growth in industrial was largely due to buoyancy in construction of infrastructure and buildings.
Exports in Q2FY18 and H1FY18 were up 7% (to Rs 48 crore) and 11% (to Rs 93 crore). Though major markets remained sluggish, the foray into new markets begin to augur well for exports.
Profits were hit largely due to high base of last year due to Kagal Incentive and front loading of expenses related to projects and acquisitions.
Package scheme of incentive for Kagal for H1FY17 was Rs 18 crore and of which about Rs 9 crore accounted in Q1FY17 and balance in Q2FY17. Kagal incentive scheme expired on March 31, 2017.
H1FY17 included interest income on income tax refund of Rs 11 crore which was accounted in Q1FY17.
In powergen business, the company continues to gain market share with the company securing large orders in 750-1010 kva segment. SlimPower series helps to gain share in sub 15kva segment.
In Industrial segment both off highway and tractor segment register high teen growth.
On exports, while the major markets like MEA including Saudi Arabia are taking longer than expected time to recover due to oil price fluctuations, the company continues to explore newer markets start yielding results. New markets in Vietnam, Myanmar and Latin America are being explored. The company is also continued to focus on introduction of new applications and acquisition of new customers and this strategy has begin to augur well for export business of the company.
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