Crompton Greaves has benefited from operational efficiencies and higher demand in Europe.
Crompton Greaves has been one of the few Indian companies to benefit from international acquisitions. In the past two quarters, its global subsidiaries revenues have grown at 50 per cent y-o-y as it benefited from rising replacement demand for power systems in Europe as well as cost efficiencies. For the September 2008 quarter, its consolidated revenues grew by 33 per cent y-o-y to Rs 2,092 crore with international operations rising 50 per cent to Rs 1,000 crore.
Crompton has cashed in on the growing demand for power systems through better utilisation at its overseas units – Pauwels, Ganz and Microsol. In Q2, its international operating profit rose by 67 per cent y-o-y to Rs 82 crore due to better design outsourcing and lower cost on raw material procurement. The operating profit margin for the international business expanded by 90 basis points to 8.8 per cent in Q2.
The domestic business didn’t fare too badly either: revenues were up 20 per cent y-o-y to Rs 1,086 crore, with industrial systems growing at 24 per cent to Rs 314 crore and power system growing at 16 per cent to Rs 530 crore. The operating profit margin for the domestic business also improved by 140 basis points to 13.2 per cent. Consolidated operating profit margin increased by 100 basis points to 11.1 per cent. In the September 2008, quarter, Crompton Greaves made its fifth foreign acquisition in the US-based MSE Power Systems, an engineering, procurement and construction (EPC) player of high voltage electric power systems for Rs 75 crore.
At the end of September 2008, Crompton’s international operations order backlog was strong at Rs 4,040 crore and the consolidated order backlog was Rs 6,780 crore.
