Bajaj Electricals Ltd expects that its EPC business, which is currently making losses, will turn around by FY23.
In an investor conference, the senior management of Bajaj Electricals Ltd, observed that the entire EPC business, comprising illumination, power distribution (PD) and transmission line towers (TLT), will turn around fully in FY23.
Incidentally, the illumination business has turned around during Q1 (April to June) of FY22. The company expects that its illumination business will breakeven during Q2 (July to September) of the current fiscal year, FY22. Through the rest of FY22, the company expects that this business will generate positive cash flows.
The EPC business – particularly PD and TLT – was adversely affected by the lockdown in Q1 of FY22 with projects not getting executed. Q2 is typically a monsoon quarter with little project execution. Recovery is therefore expected in Q3 and Q4 of FY22, and as Bajaj Electricals enters the next fiscal year, FY23, the entire EPC business is expected not to have any losses.
In a recent media release, Shekhar Bajaj, CMD, Bajaj Electricals, noted, “Our EPC segment has reduced its loss, while continuing to focus on execution and working capital. Even in a challenging quarter, we have continued to generate positive cash flow from operations. With demand picking up, we remain confident to deliver to our overall strategy and goals.”
Receivables
Bajaj Electricals had been adversely affected by high receivables from its PD business. However, the total exposure has been receding of late. Receivables from the PD business, which were around Rs.1,388 crore as of March 31, 2020, came down to Rs.972 crore as of March 31, 2021, and further to Rs.778 crore by end-June 2021.
Order book
As of July 1, 2021, the outstanding order book of the EPC business of Bajaj Electricals was Rs.888 crore that included Rs.321 crore for illumination projects, Rs.498 crore for TLT and Rs.69 crore for PD.
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