Recovery is strong & market is moving in the right direction: B Thiagarajan, MD, Blue Star

B Thiagarajan, Managing Director, Blue Star Ltd, talks about September quarter (Q2FY21) numbers demand, order book, new products and initial response to it including the air conditioners equipped with virus deactivation technology among others during an exclusive interview with Swati Khandelwal, Zee Business. Edited Excerpts:

Q: The top line was down by 28% in the September quarter and the electromechanical projects system's revenue is down by 31%. How will you summarize the highlights of the quarter and what is your outlook for future quarters?

A: The results were declared last week. I think we did better than our own expectations. As we can imagine the summer season is lost, so, therefore, Q1 was a disaster but as far as Q2 is concerned than I am happy to report that the demand has come back, as far as cooling products are concerned, for example, air conditioners have recovered to at least 80% level. I am seeing particularly September month it was 90% and October it has touched 100% of the last year level. So, there is a great recovery, there. Water purifiers also have done well, that particular business line. As far as electromechanical projects are concerned less than 70% of the sites will be operational in Q3 but in Q2 we could see some 50%-60% of the sites being operational. Apart from that, as I have been saying cash flow is important there, therefore, we are giving priority to the jobs where we have good margins or we have the good cash flow or combination of both. Therefore, you will not see recovery there to the extent of the unit key products segment. The professional electronic segment has also recovered up to 80% of the last year level but the results are not comparable there because last year as you may recall, we had a very large order from Orange and that order is not available this year. But, on the whole, the market is moving in the right direction. 

Q: Tell us the kind of order book that you foresee and what the pipeline is and what could be added to the order book by the end of the year? Also, tell us about how the demand has panned out before the festive season and do you think that it is sustainable?

A: The order book is very good and is around Rs 3,000 crore, which is marginally higher than the last year. We have not witnessed any cancellation of orders but there may be time delay issues especially in the electromechanical projects business segment. Going forward, order finalizations are happening again it is much better then what we expected. Manufacturing sector or e-Commerce or food delivery and many other segments in the area of infrastructure, like power, metro railway, are getting finalized. We are also witnessing certain tier- III, IV& V markets, including retail and malls the orders, are getting finalized. So, we should be ending the year, i.e. March 2021, again with a very healthy order book, so there is no problem on that count. 

Festival Seasons is very great. In the past six years, I have not seen a festival season like this despite the fact, we are at to be overcoming the COVID pandemic. I am witnessing a great deal of activities in the market. For air conditioners, this is not a season as you know but despite that this festival season compared with the earlier festival seasons, we would be seeing a 15% growth in air conditioners itself. The water purifier also has been doing well. It is more to the traditional channels as well as e-Commerce. I think the reason is people are spending more time at home and also there disposable income should be higher because they might have not gone on vacations. Plus, I think the government bringing up some kind of relief in terms of leave travel concessions or the bonus. I am very surprised that we are seeing a great festival season at this point of time. 

Q: Tell us about the kind of response you are getting on the new products that you have launched and plans related to the new products that will be launched and the segments related to it?

A: The products launched were with virus deactivation technology. There are two technologies deployed there. There is a special filter that the air passes through that it captures the virus and destroys it that is one particular technology component. The other one is UV. So, both the products are incorporated in residential air conditioners or commercial air conditioners or large central air conditioning systems. These products are available even on the retrofit on the existing air conditioners some of the products like UV, you can fit in the residential air conditioners even though you bought the air conditioners without that. The special filter, the virus deactivation filter, fit it in any commercial air conditioning system you can retrofit it.

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On the whole, the entire basket of products there is a great response. There are responses for new purchases as well as for retrofitting in the existing systems. As I told you that this is an off-season, we have to wait for the completion of the festival season to see how much we can migrate to this new technology. Our goal is to at least get 15% of the customers to get to buy the virus deactivation technology products.