)
Crompton Greaves’ consolidated net profit fell 30 per cent to Rs 60 crore in the first quarter of FY2014 against Rs 85 crore in the year-ago period. Revenue grew 12 per cent to Rs 3,157 crore but weakness in the power sector and costs in restructuring operations dragged down the profit. Power sector also saw a drop in profit though revenue grew at a consolidated level.
While domestic operations remained profitable, its foreign business dragged down the result. The company earns 55-60% of revenue from its Indian parent and the balance from foreign subsidiaries, spread across Europe, the Americas and Indonesia.
The company had informed analysts after the 2012-13 fourth quarter results that the restructuring in Belgium was complete and the plant had achieved break-even. The cost structure in Canada was now the main area of focus, it said. Analysts however estimate there will be no quick turn around.
'We continue to believe that the overseas plants are unlikely to make any significant contribution to the company's bottom line over 2014-15, given intense competitive forces in most major markets, gradual impact of internal efficiency drives, etc,' broking firm Edelweiss wrote in a recent research note. Analysts also said margin pressure will remain in the near term.
