Nagarjuna Construction Company (NCC) posted a consolidated net profit at Rs 12.4 crore in the third quarter of financial year 2012-13 as against loss of Rs 10.3 crore in a year ago period. Consolidated total income increased marginally to Rs 1,558 crore from Rs 1,534 crore during the same period.
YD Murthy, Exec VP-Finance,NCC said, “We have bagged substantial orders in the current quarter and the order book at the end of the quarter is Rs 18,799 crore.”
He further added, although they were able to reduce a portion of their debt, the pain of interest burden still exits for the company. However, now with reduction of interest rate by Reserve Bank of India (RBI), which the banks are likely to pass on to customers would bring down interest burden for companies like theirs he added. “Once that happens we will be back to normal levels of profit,” he told in an interview to CNBC-TV18
They are also further looking at monetising their road, power and real estate assets. They have sold some real estate assets from which they expect to get Rs 100 crore, said Murthy.
Below is the edited transcript of his interview on CNBC-TV18
Q: Can you take us through the broad highlights of the quarter gone by?
A: We have recorded a topline of Rs 1,232 crore in Q3, EBITDA of Rs 85 crore and a net profit of Rs 10.8 crore. For the nine month period ended December 2012, the topline is Rs 4,081 crore, there is a growth of 13.8 percent, EBITDA of Rs 314 crore and a net profit of Rs 35.48 crore.
We were able to reduce the debt in the books of the company by about Rs 150 crore. The outstanding debt is now around Rs 2,500 crore. We have bagged substantial orders in the current quarter and the order book at the end of the quarter is Rs 18,799 crore.
Q: Can you tell us a little bit about what the margins were like in the quarter gone by?
A: At EBITDA margin level, we are still around 8 percent which is our comfort zone. The real problem is at net profit level, mainly because of the high interest burden. The net profit margin is just around one percent.
Q: Interests costs have been on an upward trajectory impacting working capital etc. Can you tell us a little more about that? How it was in the quarter?
A: The pain of interest burden is very much there in the company. With the reduction of debt and progressive monetization of assets, we are planning to bring down the debt levels further. And with the RBI action of reducing the interest rates, which the banks are likely to pass onto us, the interest burden for companies like us is likely to go down as we go forward.
The interest rates were going up over a period of time likewise when they come down also it will take time, maybe one year to 18 months. Once that happens we will be back to normal levels of profits.
Q: Monetization of some of your assets has been on the cards. Can you tell us a little bit about what has been going on, on that front?
A: We have been looking at monetising some of our road assets and one power asset and we are talking to the investors. However, the market conditions are not very conducive, there are too many sellers and few buyers but we were able to sell some real estate assets and got some money into the company. The balance money is going to come into the company in Q4. Altogether the sale of real estate assets is going to be of the order of about Rs 100 crore.