Consumer electrical goods maker Havells India Ltd reported a decline of 8.38 percent in its standalone net profit to Rs 206.83 crore for the March 2019 quarter, impacted by demand slowdown. The company had posted a net profit of Rs 225.76 crore in the January-March quarter a year ago. However, its total income during the quarter was up 8.67 percent to Rs 2,782.81 crore as against Rs 2,560.64 crore in the corresponding quarter of the previous year. Havells India's total expenses in the quarter stood at Rs 2,474.22 crore, compared with Rs 2,220.28 crore in the corresponding period last year, a rise of 11.43 percent.
Meanwhile, revenue from Lloyd Consumer, a company which Havells had acquired in 2017, was down 8.85 percent to Rs 532.40 crore as against Rs 584.10 crore.
Anil Rai Gupta, chairman and managing director, Havells India, discussed the performance.
“The biggest shortfall came from the summer-related products. There is no doubt that the summer months were delayed. What we were expecting by February, came by end of March. So there was a slow pick up in the sales of products which are related to the season. However, this particular quarter we are definitely seeing a good season and hopefully things should come back very quickly,” Gupta said.
“What we could see in the last few months was also not just the seasonal effect but also an effect of the liquidity crunch after the non-banking financial companies (NBFCs) crisis. So that led to a reduction in inventory in the trade. So it is not that the inventory in the trade was high, the inventory in the trade is at a lower level. The inventories for the companies went up because they could not see the kind of pick-up, which they were expecting and that would normalise by the end of this quarter. The trade inventories are at a normalised level, not at a very high level,” he added.
In terms of working capital, Gupta said, “It would come back to normalised levels within the next few months because this is due to the fact of the delayed seasonal impact.”
Regarding price hikes, he said, “There have been price hikes in Lloyd but not commensurate to the increase in the cost but due to the increase in customs duties as well as the effect on the foreign exchange. However, over a period of time, as our new plant comes up, we would see these margins coming up because then we would not be looking at the vagaries of the volatile foreign exchange as well as the higher customs duty.