AC, commercial refrigeration businesses to return to normal by last quarter of this fiscal: Blue Star

Blue Star has said it expects its room or residential air conditioners and commercial refrigeration businesses to get back to normal by the last quarter of the current financial year after it reported a steep fall in its revenue hit by COVID-19 led disruptions. The company, which reported a consolidated net loss of 19.66 crore for the first quarter ended June 30, 2020, said its manufacturing and supply chain operations are fully operational.
Blue Star had posted a net profit of Rs 76.84 crore in the April-June quarter a year ago. "We have cut the operating costs in line with the potential revenue loss and infused capital through long-term debt to strengthen the resilience of our balance sheet. We will continue to prioritise project execution based on cash flow," Blue Star said in an investors' update. The room air conditioners and commercial refrigeration businesses are expected to gain traction gradually and expectation is that the market will get back to normal by Q4FY21, it said.

The company said healthcare, pharma and processed foods segments will continue to offer good opportunities for the commercial refrigeration business in the new normal. "We will endeavour to overcome this challenging phase in a balanced and agile manner with focus on prudent management of working capital and operating costs, while ramping up revenue," the company added.

During the first quarter of the current fiscal, Blue Star's revenue from unitary products -- room air conditioner, commercial refrigeration and water purifier business -- was at Rs 274.85 crore as compared to Rs 906.89 crore in the first quarter of 2019-20, a decline of 69.7 per cent. "Inability to sell during a substantial part of the peak selling summer season combined with additional burden of demurrage and detention charges due to the lockdown resulted in erosion of margins," the company said.

Blue Star said, for the room air conditioner business, it estimates that the market shrunk by almost 65 per cent during the quarter with the conventional retail outlets and non-essential e-commerce sales shut till the third week of May due the ongoing COVID-19 pandemic.

The impact of the pandemic on our water purifier business was relatively moderate, the company added. During the first quarter of the current fiscal, Blue Star reported revenue from operations of Rs 626.02 crore during the first quarter ended June 30, 2020. It was Rs 1,575.45 crore in the corresponding period last fiscal.