Crompton Greaves Consumer Electricals Limited (Crompton) is making significant strides in the solar energy sector, aiming to generate ₹2,000 crore in revenue from its solar pumps and rooftop projects over the next 18-24 months. The company's ambitious plans are backed by recent major contract wins and a strong focus on expanding its solar capabilities.

Major Solar Rooftop Orders

Crompton has secured substantial orders in the solar rooftop segment:

• A ₹52.00 crore order in Telangana
• Its largest-ever solar rooftop order of ₹445.00 crore in Andhra Pradesh

These orders, totaling nearly ₹500.00 crore, are expected to serve approximately 50,000 consumer households, marking a key milestone in Crompton's solar journey. The company plans to execute these projects within the next 6-12 months.

Expanding Solar Business

Crompton is actively strengthening its position in the solar market:

• Solar Pumps: The company has already executed orders worth ₹372.00 crore and installed about 60 MW of solar pumps, totaling over 12,000 units.
• Market Presence: Crompton operates in four states - Maharashtra, Rajasthan, Haryana, and Madhya Pradesh.
• Market Potential: The solar pumps market is estimated at ₹30,000-35,000 crore, supported by government initiatives like the PM KUSUM Scheme.

Strengthening Execution Capabilities

To support its growth in the solar sector, Crompton is enhancing its execution capabilities:

1. Design & Engineering: Dedicated team developing products as per MNRE norms
2. Procurement & Quality Assurance: Implementing diligent vendor selection and well-defined quality standards
3. Inspection & Audit: Multi-stage audit process and centralized monitoring
4. Strategic Partnerships: Establishing long-term partnerships and efficient site monitoring via Remote Monitoring Systems (RMS)
5. Distribution & After-Sales Network: Setting up dedicated service centers

Financial Performance

Crompton reported its Q2 results:

• Consolidated revenue stood at ₹1,916.00 crore, showing a modest 1% year-on-year growth.
• Adjusted EBITDA was ₹158.00 crore with a margin of 8.3%, declining year-on-year due to various factors including commodity inflation and pricing pressures.
• Adjusted PAT (excluding restructuring costs) was ₹91.00 crore.

Segment Performance

1. Electric Consumer Durables (ECD):

   • Revenue: ₹1,371.00 crore, down 1.5% YoY
   • Strong performance in Pumps and Small Domestic Appliances (SDA)
   • Fans and Large Domestic Appliances (LDA) faced challenges due to adverse weather conditions

2. Lighting:

   • Revenue: ₹261.00 crore, up 3.1% YoY
   • Volume growth rebounded to high-teens
   • B2C growth driven by ceiling lights and street/flood segments

3. Butterfly Gandhimathi Appliances Ltd:

   • Revenue: ₹293.00 crore, strong growth of 14% YoY
   • EBITDA grew by 21% YoY, driven by gross margin improvement

Management Commentary

Promeet Ghosh, MD & CEO of Crompton, commented on the company's performance: "Despite a challenging environment, our well-diversified product portfolio remained resilient with strong momentum in pumps, small domestic and kitchen appliances. We believe GST 2.0 will act as a structural catalyst to consumption, with benefits percolating to the durables segment in a phased manner."

He added, "These orders are expected to provide significant fillip to our direct to consume business and marks the beginning of a new growth engine, backed by the Company's proven excellence in execution and a robust supply chain network."

Crompton remains committed to strengthening its brand, expanding distribution, focusing on innovation, enhancing manufacturing capabilities, and investing in its people to capture future opportunities and sustain long-term growth.

As Crompton Greaves Consumer Electricals Limited continues to diversify and strengthen its position in the solar energy sector, the company appears well-positioned to capitalize on the growing demand for renewable energy solutions in India.

Crompton Greaves Consumer Electricals Ltd (CGCEL) has reported a mixed set of financial results for the second quarter, with revenue growth offset by a significant decline in profitability.

Revenue Growth Amid Profit Decline

The company's consolidated revenue from operations for Q2 increased marginally to ₹1,915.57 crore, up from ₹1,896.15 crore in the same quarter last year. However, the consolidated net profit saw a substantial decrease of 41.1% year-over-year, falling to ₹75.42 crore from ₹128.07 crore in Q2 of the previous fiscal year.

Segment Performance

CGCEL's performance varied across its business segments:

The Butterfly Products segment showed the strongest growth, while the core Electric Consumer Durables segment experienced a slight decline.

Profitability Pressures

The company's profitability was under pressure during the quarter:

• EBITDA declined to ₹158.00 crore from ₹203.00 crore year-over-year
• EBITDA margin compressed to 8.27% from 10.74% in the previous year
• Finance costs decreased to ₹5.16 crore from ₹12.04 crore

Restructuring and Exceptional Item

CGCEL reported an exceptional item charge of ₹20.36 crore for the quarter, related to the restructuring of its Vadodara plant operations. The company is transforming the facility from a lighting-focused plant to a multi-business facility, which may impact short-term results but could potentially improve operational efficiency in the long run.

Balance Sheet and Cash Flow

As of the end of the quarter, CGCEL maintained a strong balance sheet:

• Total assets stood at ₹6,002.05 crore
• Cash and cash equivalents were ₹26.17 crore
• The company fully redeemed its listed secured Non-Convertible Debentures of ₹300.00 crore in July

Outlook

The mixed results reflect both challenges and opportunities for Crompton Greaves Consumer Electricals. While the company faces profitability pressures, the growth in the Butterfly Products segment and the ongoing restructuring efforts may position it for future growth. The company's ability to navigate changing consumer preferences and operational challenges will be crucial for its performance in the competitive landscape.