BackBlue Star expects Rs2,200 crore orders in FY11
Blue Star expects Rs2,200 crore orders in FY11
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Mumbai: Refrigeration and cooling systems manufacturer Blue Star Ltd hopes to book orders worth Rs2,200 crore this fiscal, a top official said.
The orders will be under its electromechanical projects business, Vir Advani, executive director, told Reuters in an interview on Tuesday.
“About Rs600 crore of order inflow this year will be from relatively new markets under the electromechanical projects business."
“The core business under electromechanical projects, which is commercial buildings, will continue to be by far the largest. That somewhere in terms of inflow will be around Rs1,600 crore," he added.
The company has three business segments - electromechanical, which includes projects and equipments; cooling products; and professional electronics and industrial systems.
The firm, however, admitted that order inflow in projects continued to remain sluggish, but said demand under equipments has started reviving.
The firm’s orderbook at June-end stood at Rs1,900 crore.
Blue Star is looking at new markets under the projects business such as the power sector and the industrial market, and plans to enter the water sector in the next fiscal, Advani said.
“In these markets sometimes in the 12-18 months we will be able to decide about acquisitions," he said.
“If I have to think about our projects business over the next 5 years, we have to acquire about 3 entities, because we can see 3-4 new markets we need to be in," he added.
The firm, which saw 10% of its project business revenues from new segments this fiscal, hopes to expand this to 40 percent of its project business revenues in the next 5 years.
However it only plans to grow its projects business in India.“We are more inclined towards export of equipment overseas."
The cooling systems maker pans to export equipment to the Middle East, Southern Europe and Africa in 12-18 months, he said. It has set aside a capital expenditure of 400 million rupees in FY11, largely for maintenance purposes.
Price hike
Blue Star plans to increase prices of its central plant equipment by 3-5% in the near-term on the back of a sharp rise in input costs, Advani said.
Prices of steel and copper, the main raw materials for the firm, are up 10% and 100% respectively, he said.
It expects the benefits from pricing changes to only show on its margins from the third quarter of this fiscal as the current inventory will pressure its margins in the September quarter.
It will, however, not revise prices of cooling products.
“We are not the cheapest in the market in that segment anyway and there is a certain section of the market we cater to there. We are able to drive 30-35% volume growth in it which is acceptable to us," Advani said.
Bluestar reported a 10% fall in net profit in the quarter ended June, to Rs37.15 crore, largely hurt by a rise in input costs. Net sales, however, grew 23% to Rs6,600 crore.
“We hope to see 20-25% revenue growth this fiscal without much of a problem," Advani said.
At 10.34 a.m., shares of the firm were up 0.5% at Rs438 in a flat Mumbai market.
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