Highlights of the concall:
- Carry Forward Order Book as on quarter ended December 08 increased to Rs 1626 crore as compared to Rs 1072 crore during the corresponding period last year, indicating a growth of 52%.
- The break up of carry forward order book for EMP segment to be around Rs 1486 crore (as against Rs 920 crore in corresponding previous year), Cooling Products segment at Rs 53 crore (Rs 72 crore) and Professional Electronics and Industrial Systems at Rs 87 crore (Rs 74 crore)
- Order Inflow during the quarter grew from Rs 556 crore in quarter ended December 07 to Rs 625 crore in the quarter ended December 08, an increase of 12%.
- The central air conditioning and electrical contracting business, collectively called Electro Mechanical Projects and Packaged Air conditioning Systems grew by 12% to Rs 422.32 crore during the quarter. Segment results declined by 14% to Rs 38.63 crore in the quarter compared to Rs 44.80 crore in the corresponding quarter in the previous year.
- While the liquidity crunch in the market place coupled with declining demand adversely affected certain segments such as retail and builders, the Company saw good prospects from the hospitality, healthcare and education segments. In addition, infrastructure segments such as airports, power plants and metro rail are unaffected by the economic downturn and project expansion plans are on track.
- During the quarter, the Company booked a prestigious order from Fortis Hospital Group for their upcoming flagship hospital in Gurgaon. The project, valued at Rs.37 crore includes both HVAC and electrical works and is the largest combined M&E order booked by the Company after its foray into electrical contracting last year.
- The company has booked prestigious Government orders for HVAC works of Jawaharlal Nehru Bhawan, New Delhi and Central Drug Research Institute, Lucknow. In addition to these the company has also booked several orders for the air conditioning of various stadiums coming up in New Delhi for the Commonwealth Games scheduled in 2010.
- Company received several repeat orders from customers like Moser Baer, DLF, Apollo Hospital Group, Cognizant Technologies and Hindustan Unilever Limited etc.
- The company has observed that the exist gap between pending orders and billing has widened which depict that the orders have been delayed. Particularly project expansion plans in the IT/ITES segment are delayed, due to the uncertainty on the impact that the US recession. However, the company did not observe any cancellation of orders until now.
- The Cooling Products segment registered a decline of 5% in revenue to Rs 94.93 crore. Segment results declined 23% to Rs 9.88 crore.
- Professional Electronics and Industrial Systems business registered a 31% growth in revenues to Rs 49.47 crore. The top line of this business is predominantly commission income and domestic value addition since most of the equipment is sold to customers on a high-sea basis by its Principals. Segment results registered a growth of 19% to Rs 10.30 crore.
- Blue Star is steadily increasing its market share in manufacturer of VRF systems market which was a Japanese-equipment stronghold, and is now the No 2 player, with a market share of over 20%.
- The company has observed that the gap between pending orders and billing has widened which depict that the orders have been delayed.
- However, the company is able to reduce the inventory (which is higher in Q2) and also observed improvement in the receivables.
- The capex of the company for the fiscal is around Rs 101 crore of which the capex at the end of quarter ended December 08 is around Rs 59 crore.
- The company has observed demand for deep freezer’s, water coolers and cold storages going up by 30% in the quarter ended December 08. The demand for deep freezers is mainly due to modernizations of Mom & Pop stores.
- With in the present adverse economic conditions, the company expects that the execution period of its order book will be around 12 months.
- The company expects Naseer Electricals to report growth of 35% on y-o-y basis.
- Going further, the company expects that the Q4FY09 will be better than the Q3FY09.