V-Guard reports Rs50 cr Q2 net profit; getting back on growth path

BBN report

KOCHI/October 29-2020: Despite being battered by the onslaught of COVID 19 for the whole six months in the first half (H1), V-Guard Industries, the diversified multi-product company, managed to hold up its performance, to a good extent, during the period under review.

V-Guard reported a 12.7 per cent drop in its net profit for the second quarter (Q2) ending September 30, from Rs57.32 crore to Rs50.01 crore.

With the first quarter obviously being a washout for the business as a whole, the company’s earnings for H1 were just a reflection of the second quarter, and had to satisfy with Rs53.63 crore net profit compared with Rs109.77 crore for the same period in the earlier year, thus representing a decline of 51.1 per cent year on year.

While the net revenue for Q2 dropped 0.4 per cent, from Rs619.66 crore to Rs616.66 crore, the net revenue for the first half (H1) was Rs1,022.49 crore against Rs1318.70 crore a year earlier, representing a drop of 22.5 per cent.

The company maintained net cash of Rs452.7 crore on balance sheet as on September 30, 2020, as against Rs288.9 crore in September, 2019.

Outsourcing

V-Guard outsources 60 per cent of its products while the rest are manufactured in-house, keeping a strong control in designs and quality. It has manufacturing facilities in Coimbatore (Tamil Nadu), Kashipur (Uttaranchal) and Kala Amb (Himachal Pradesh).

V-Guard’s financial performance in the second quarter saw a sharp rebound from the virus-caused weakness in Q1 and the revenues were in line with that in the previous year.

Mithun Chittilappilly (seen in the picture) , Managing Director of the company, said that except for the intermittent lockdowns, most of company’s consumption markets were back to near normal levels, barring Kerala, which was impacted by the recent surge in Covid infections.

On the supply side, V-Guard had to contend with significant supply disruption from its Sikkim Water Heater plant, which went into lockdown for a few weeks, causing loss in revenues.

“Within our product segments, fans, pumps and digital UPS registered growth. There was weakness in demand off-take for voltage stabilisers, while water heaters sale declined due to the supply disruption,” Chittilappilly said.

New products

During the quarter, the company launched a range of new products – water purifiers, breakfast appliances, kitchen hobs and chimneys – through online channels.

On the balance sheet side, the company’s cash flows remain strong and prudent working capital management has resulted in over Rs300 crore of cash generation in the first half of the year.

“With supply-related issues largely resolved and with the onset of the festive season, we now expect to get back on to the growth path during the coming quarter and look forward to regaining faster momentum in the business based on our brand position and strong customer proposition,” MD exuded confidence.

 

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