SWELECT Energy says product sales may drop 50 pc in Q1 due to coronavirus pandemic

SWELECT Energy Systems Ltd on Thursday said its product sales will dip about 50 per cent in the first quarter of the current financial year, due to the coronavirus-induced lockdown. "Estimated impact of COVID-19 for the first quarter of the financial year 2020-21 will be approximately 50 per cent drop on a year-on-year basis in product sales and a 15 per cent fall in power sales as we envisage during the first quarter," the company said in a regulatory filing.

According, it is difficult for the company to estimate the definitive impact of the COVID-19 pandemic on its operations beyond the first quarter of the financial year 2020-21 at this point of time. It said it is closely monitoring the situation arising out of the COVID-19 pandemic.

With the gradual phasing out of the lockdown going forward, the company expects to see demand revival, it added. It stated that in the past two months, the company's operations have been impacted due to insignificant sales and committed costs being incurred.

Revenue and profitability will also be impacted. Notwithstanding this, the company expects to mitigate the adverse impact by converting some of the fixed overheads into variable overheads and also by reducing various variable and fixed costs, it said.

Also, even before COVID-19, the company embarked upon a company-wide initiative to bring down costs and conserve cash. The firm is expected to get benefits as a consequence of these initiatives in the future. The performance will improve progressively in the following periods as the demand levels are restored, it said.

The company has adopted strategic decisions to combat the challenges in the profitability of the company and has also successfully implemented them with the support of the senior executives and the government..

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