The standalone order intake was up by 32% and the order book position stands at Rs 2674 crore up by 23%. On consolidated basis the order intake was up by 23% and the order backlog was up by 28% in rupee terms and 20% in $ terms to Rs 6529 crore.
Power sector constitutes nearly 87% of the unexecuted order book position and will continue to be the growth driver in future. The company expects the transformer demand to continue to grow around 20%. The tenders of PGCIL were opened during Q3 and are under evaluation. The orders will be released by PGCIL in Jan-Mar quarter. Crompton Greaves has bid for Rs 3500 crore of order value.
In international market, the housing slowdown has affected the distribution transformer demand particularly in US and some parts of EU such as Ireland, Italy etc, while the demand for power transformers have more or less remained unaffected. Some demand slowdown in housing sector has already been compensated by demand of Wind energy/ renewal energy transformers. Hence the order growth stands around 20-23% which otherwise would have been much better. Overall the company is positive of growth momentum to continue in power transformer division for the next 6-8 months from now.
During Q3 FY’09 the excise duty has come down due to reduction in excise rates, which stands at 10% as against 16% in Q3 FY’08. Further the standalone depreciation was lower due to reversal of impairment of loss to the extent of Rs 2 crore and at consolidated level, the depreciation policy has been changed to IGAAP or local GAAP whichever is higher, from the earlier adopted Belgium GAAP. As a result of which at consolidated level, the depreciation is lower by Rs 9.60 crore.
Industrial systems grew by only 4% during quarter and 15% for the nine months. The company expects the division to end the year-end growth with 15%. There are some signs of margin pressure as the companies are trying to create the demand by price reductions and more discounts.
Both the subsidiaries, Ganz and Pauwells did better than the industry and the company expects the Ganz to breakeven by the year-end Mar’09.
The other income at standalone level is lower due to Rs 2.50 crore of forex gain in Q3 FY’08, which was NIL in the current quarter.
Capacity utilization across its plants will be in the range varying from plant to plant with a minimum of 65% and a maximum of 85%. Current capacity utilization levels were in line with the trends in the past.
US Plant is catering only to distribution transformers and the power transformers for US market from Canada.
Lot of talk of Public spending by EU governments in T&D sector is there, but no package has been put in place yet.
Capex for next fiscal is Rs 150 crore.
In the nine month no order has got cancelled. Usually orders placed after financial closure.
Standalone cash and bank balance is Rs 299 cr and a debt of Rs 57 crore. At consolidated level Rs 780 crore of debt. 6% is the average cost of borrowing at consolidated level. All are euro par loans.
Power Systems business of the company will continue to be the growth driver for the company and 87% of the unexecuted order book is for power systems. Current order book will give visibility for next 6-8 months and the company is confident of maintaining the 9 month growth and margin for the fiscal.
The company maintained its year-end guidance of 20-22% during FY’09 and is confident of 15% volume growth in FY’10 as the value growth will be determined by the selling prices of final products and margins in power segment will be maintained going forward.
Commodity price will not have a much impact on the margin of the company as it has the practice of hedging the commodity price as soon as the order is finalized. The hedging is done at a price of the input considered for the bagging of the relevant contract.
The debt at consolidated level is around Rs 780 crore at 6% rate of interest.