Crompton Greaves profit down 63%

Weakness in overseas business remains

Crompton Greaves  has reported a 63 percent fall in its consolidated net profit in second quarter FY 2013  on the back of continued weakness in its overseas operations. Net profit dropped to Rs 42.05 crore as against Rs 116 crore in same period last year.

Revenue grew by 8 percent to Rs 2924 crore but profits dipped. Power segment which contributes the bulk of business saw witnessed  88 percent fall  in the profit. On a consolidated level power segment profit shrank to Rs 10 crore from Rs 93 crore in second quarter last year.

CG’s business is divided into three main segments, with the power business contributing the most (65 per cent) to the revenue, followed by consumer products (18 per cent) and industrial systems (16 per cent). The company earns nearly 55-60 per cent of the revenue from its Indian parent and the balance from its overseas subsidiaries spread across Belgium, France, the US, Canada, Germany, the UK, Indonesia and Hungary.

Crompton Greaves issued no statement on the results but analysts said the results were disappointing because of margin pressure and weakness in overseas business. According to sources "The company's consumer business segment has performed well with expansion of product portfolio. Overall order flow too has increased on a quarter-on-quarter basis.''

Earlier this chief executive officer Laurent Demortier chalked out  a four-point plan to  revive the business. This includes developing  and sell high-value 765-kV and 1,200-kV transformers, improve sourcing of raw materials, expand manufacturing footprint, consolidate European manufacturing units and enhance sustainability of programmes to save water, paper and chemicals in factories. These measures, the company hopes, will increase its Ebitda by 450 basis points by 2015. In 2012, CG reported an Ebitda of Rs 803 crore.

The company's stock fell by a percent to close at Rs 122.80 on Friday