Revenue from electricals and durables pick up the slack from pandemic induced electronics drop. CFO Sudarshan Kasturi remains wary of third wave but anticipates a good year going forward.
V-Guard Industries Ltd., announced its unaudited financial results for the quarter ended June 30, 2021, recording a consolidated net revenue of Rs 565.2 Crores. This is a 38.5 per cent increase compared to the corresponding period last year which stood at Rs 408 Crores.
The profit after tax for the quarter stood at Rs.25.5 Cr, this is a huge growth of almost 600 per cent in comparison to Q1 last year when the pandemic set in.
The Electricals and electronics company recorded a gross margin increase of 3.8% this quarter, which is said to have gained from price realisation.
Speaking to BW Businessworld about the gross margin rise, Sudarshan Kasturi, the Senior VP and Chief Financial Officer at V-Guard said, “With the pricing actions in the last few months we’ve been able to neutralize most of the commodity cost inflations…The commodity inflations have been going on for 2-3 quarters now and the corrections have been taking place in steps as they landed. Now we are in a position where we have covered most of it (the cost inflation) and that’s why the margins have improved.”
The sales of electricals and durables in the context of demand constraints have been favourable for the company. However, electronics such as UPS, inverters and stabilizers have been on the line of pandemic fire. Kasturi explains that with the second wave coinciding with the summer season when this segment peaks, the sales were impacted. However, with one eye wary on a possible third wave, he remains optimistic that the slump in demand for electronics was a one-off event and the upcoming festive season and the month of December should see an increase in demand in all segments.
The company also recorded good demand in Q3 and Q4 of FY 20-21 reaching pre-pandemic levels. Going ahead Kasturi remarks, “All I want to say is, if the quarter gone by is anything to indicate then, other than the disruption by pandemic, we’ve had a decent quarter. And as long as it’s a normal environment (no third wave) and not even necessarily favourable, it will be a good year”
In the last quarter, with the lockdown, V-guard’s manufacturing units, particularly in Sikkim remained shut. Notably, savings on cost overheads during the quarter have partly helped offset the impact on topline, explains Kasturi.
Learning supply-chain lessons from the pandemic, he says that the key is to keep the supply chain nimble and strategize inventory ahead of time to meet unforeseen contingencies.
Moving on from commodity cost inflations, V-guard expects to bounce back strong in the coming quarters. V-guard share price stood at Rs 249 at the close of market day.