McNally Bharat Engineering bagged order worth Rs 127 crore from the oil PSU Bharat Petroleum Corporation for its project at Kochi. Speaking to CNBC-TV18 about the order, Prabir Ghosh, group CFO of the company says the current order book of the company stands at Rs 7,000 crore. The company hopes to bag another order worth Rs 1,500 crore in the second half of the year.
According to Ghosh, this is the first year when the company has received orders in oil and gas sector reflecting positive development in the overall strategy of the company.
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Meanwhile, Ghosh believes the company will end FY14 with a debt of around Rs 700 crore unlike Rs 600 crore projected earlier.
Below is the verbatim transcript of Prabir Ghosh’s interview on CNBC-TV18
Q: Take us through the Rs 128 crore order that you have won and what kind of margins will you have on this order?
A: This order is from the oil and gas sector, it is from BPCL. It is a construction order from the Kochi plant and will have a decent margin which is in line with our blended margin. This is the third order we got from BPCL this year which is very important because this is a new sector for us. Earlier, we have not worked with the oil and gas sector so this is a positive development happening in the overall business strategy of the company.
Q: Are there any more deals currently in the pipeline? Where does the order book currently stand?
A: As of today, our order book stands at around Rs 7000 crore and we hope that from the second half of the year we should be able to book at least another order worth Rs 1500 crore.
Q: You said this is your first order in the oil and gas space.
A: This is not the first order, it is the first year where we have got three orders, first lot of orders from oil and gas sector and from BPCL which is one of the leading oil PSU.
Q: Blended margins of about 8 percent, so will this be in line with your expectations?
A: We don’t talk about margins on specific order but order will be in line with our blended margins.
Q: Last time you said that currently the debt on your books is Rs 700 crore and you plan to reduce it to Rs 600 crore by FY14 end. Is that plan on target or have you modified it?
A: Our effort is to bring down debt level but considering the current market scenario and the current financial situation of some of our leading customers which includes PSU customers, though our efforts will be on, but we should be around Rs 700 crore at the end of March. It may not come down to that kind of level.