According to Anil Gupta, CMD of KEI Industries the company expects 20-25% topline growth for FY15 and aims to better that in FY16.
The company also aims to repay its fixed term debt in the next two to two and half years. The current term debt is around Rs 200 crore, says Gupta
The order book for the company currently stands at Rs 1700 crore. Gupta expects another Rs 200-300 crore orders from the turnkey projects.
The company wants to improve its market share by two percent from the current 10-11 percent in the organised sector in the coming 1-2 years.
Talking about the outlook for the company, Gupta says there would be substantial order book growth from the increased underground transmission lines by both state utilities and public sector utilities. He also sees substantial growth in revenues from the metro projects and some of the power projects that were stuck earlier due to non availability of coal, gas.
"We also expect that power generation sector, real estate and construction sector will also zoom in the next financial year because of the unblocking of some of the bottlenecks," says Gupta.
KEI Industries is the leading player in the wires and cables industry. It manufactures high and low tension cables (EHV, HT & LT), control and instrumentation cables, house wires and stainless steel wires. Its unique product range is known pan India and across the globe.
Below is the transcript of Anil Gupta’s interview with Sumaira Abidi and Reema Tendulkar on CNBC-TV18.
Sumaira: Your annual profit after tax (PAT) as well as a five year sales compound annual growth rate (CAGR) has been beating industry average and by quite a margin. Is that something that we can expect to see even in FY16, the rest of FY15 as well?
A: This year growth has been good in spite of our traditional markets getting stable but we have emerged bigger because of some of our turnkey projects in extra high voltage cable segment as well as turnkey projects in distribution side. This year we are expecting a topline growth of 20-25 percent and going forward in the next financial year it maybe better.
Reema: What about the recent order wins, can you walk us through what the company’s order book stands at, what the deal pipeline is looking like and are the new deals coming in at higher pricing?
A: At the moment our order book is approximately Rs 1700 crore and another Rs 200-300 crore worth of turnkey orders are in pipeline. Apart from that we are a major and leading supplier to most of the metro projects in India, in this financial year as well as in the coming financial year FY16. This has been a major mover for us.
Transmission and distribution segment in the power sector too has been good in this financial year and we expect that to continue. We also expect that power generation sector, real estate and construction sector will also zoom in the next financial year because of the unblocking of some of the bottlenecks.
Sumaira: Your finance costs are quite high in fact if I see even from FY12-FY13 to FY14 it is almost near that Rs 100 crore mark or a little above which is about a third of your market cap is. What exactly is the debt on your books and what are your plans to bring it down?
A: The debt on the books is approximately Rs 200 crore which is the term debt and rest is the working capital loans. We did substantial investments in the extra high voltage cable factory and capacity expansions but the demand was sluggish, hence some of the loans dragged. We also had foreign currency convertible bonds (FCCB) repayment that we did in end of 2011 and some of the effect is due to that.
However, going forward in next two to three years most of this fixed term debts will be repaid and our loan book will be leaner.
Reema: When are you expecting to repay the term debt?
A: Within next two to two and half a year most of the term debt will be paid.
Reema: What is going to be the next big trigger for the company in the next year as we look ahead? Can you walk us through some big milestone that could improve the performance of KEI Industries fundamentally?
A: In the next financial year we have a lot of extra high voltage cable projects in pipeline. Some of them are already in hand and some of them are expected shortly to be ordered.
Secondly we see a substantial growth in the underground transmission lines by state utilities as well as the central public sector utilities which will result into larger order book for the company. Apart from that KEI is also taking some of the distribution projects with major thrust on the cabling which has materialised.
We also see substantial growth in our revenues from the metro projects and also some of the power projects which have been stuck for many years due to this coal blockage and non availability of gas. Apart from that we have taken significant steps in the export front also which will definitely result into better performance in the next financial year.
Sumaira: While your stock performance has overshot a lot of your peers could you tell us what is the market share that you enjoy?
A: Approximately we have a market share of 10-11 percent in the organised sector. We are continuously trying to improve our market share by another 2 percentage points in the coming one or two years.