It is a bit of a drag if I am looking at your top line and profit figures so is this an indication of the performance to come or is this just a one off?
Certainly it is an indicator of what is happening in the market but better results than what even we expected for quarter barring some one off expenses taken. Despite having a reduced intake of orders and the top line having dropped by 13%, we have been able to retain the balance sheet at the bottom line, with a drop of only 2-2.5%. So that is an improvement of the percentage profitability. Normally when you have a dropping on the top line happening bottom line also disproportionately comes down.
We have been able to contain the costs and retain it that way. And if I were to look at maybe a fairly large order which should happen in the current quarter which ideally should have been last year’s order but it is registered only in the current year because prudency demands that you register an order only when you have the advance available with you. Our order book position is better than what it was last year at this point of time though 31st of March could have been a little lower, that is point number one.
I have to admit that there are no substantial improvements in the market by which I should say that I am very-very positive. Yes, I am not negative anymore. I am certainly over from the negative phase of what we have seen in the past maybe couple of years.
Tell us about how the flow of orders is trending right now?
We have seen an uptick in the consumer segment. The consumption led segment took a major beating post demonetisation and all of us were worried. Food, food processing, beverages, alcohol, textiles, light engineering and pharma will continue to attract investment in the coming year. But the areas which should really make the needle move are the ones like cement, steel, fertiliser, oil and gas, and power. These five segments are not expected to see substantial improvement though I need to admit over here that the cement sector should move into an investment worthy area towards the end of the current year.
Your segmental performance, barring environment segment, has been a bit muted. So going forward which segment is going to drive your growth?
Certainly energy is the major sector for the company but my thrust will be lot more outside India than in India. Within India I am not expecting that things are going to be lifting up substantially so I am going to focus a lot more outside. Not that it is an easy playfield for anyone of us; there are enough sharks over there from multiple countries like Europe, Japan, Korea and China of course. We will compete against them but there are a set of customers who have confidence on companies like Thermax. If my customer segment which is expanding were to be reposing faith on me I should report a little better order booking in the current year than the previous year.
What GST does overall for your company, what it does for your sector?
Temporarily there will be setback on account of the fact that the orders which are currently interstate in nature. The incidence of GST will go up from 14.5 to 18% so there will certainly be a give and take between me and my customers in majority of the contracts and thereafter it will settle down because after all whatever he is paying he can offset it against his sales in the future. So with that I think it should be almost neutral as we move in but temporarily for the first maybe six to nine months of overlap contracts but otherwise it is not going to be hurting us beyond a level. Some hurt will happen in the short term but not in the long term.
When you say some hurt what would be the nature of that?
It will be very small because at least a good part of the contracts where there is no definition available who is going to pay for it. Certainly we would request customers to lift it up so it should be manageable. It will not be visible to anyone of you.