Engineering firm Kalpataru Power Transmission Ltd (KPTL) reported a 57 percent jump in its standalone net profit at Rs 57.14 crore in the quarter ended December 31, 2016. The company is confident of 15-20 percent growth next year.
Speaking to CNBC-TV18, company’s MD Manish Mohnot said, “We will keep our operating margins in the range of 10.5-11 percent and also focus on maintaining our interest cost at levels of 2 percent of our revenue.”
However, company’s order inflow in the third quarter was muted. Mohnot said that the order book for Q3 was not as good as they had expected but post December, company has declared orders of around Rs 1,600 crore. “Our current order book visibility is around Rs 10,000 crore,” added Mohnot.
In the current year, a significant chunk of the orders came from the international market, primarily the African markets. Company’s order book is 55 percent international and 45 percent domestic.
Among the company's subsidiaries, Shubham logistics was the worst hit by demonetisation and Mohnoit doesn't expect the utilisation level of the company to improve in the fourth quarter.
Below is the verbatim transcript of Manish Mohnot's interview to Latha Venkatesh & Sonia Shenoy.
Sonia: Take us through what the way forward could be. The order inflow in this quarter was quite muted compared to what you have seen in the past. What can we expect for the next few quarters?
A: The order book for Q3 was not as good as we had expected but post December we have declared orders of around Rs 1,600 crore. Our current order book visibility is around Rs 10,000 crore and with that we are confident that we will achieve our 15-20 percent targeted growth for the current year and also for the next year.
Latha: Therefore what will you guide for in terms of revenues for next year, for FY18?
A: We will be guiding for 15-20 percent growth and keeping our operating margins in the range of 10.5-11 percent and also focus on maintaining our interest cost at levels of 2 percent of our revenue which is our targeted plans for next year.
Latha: Interest cost compared to what this year. I would assume interest cost would have fallen?
A: Yes, compared to previous year this year\\'s interest cost is already down by 25 percent and we expect that this should further come down getting into next year because debt levels are at very low levels as compared to our targeted numbers and that is what our focus is going to be into the next year.
Latha: Where have the orders come from?
A: A significant chunk of orders have come from the international market in the current year, primarily the African markets. So, today our order book is 55 percent international and 45 percent domestic. We have also seen good traction coming into the railway orders and some into oil and gas pipelines.
Sonia: What kind of margins do you think you can deliver considering that some of the international markets are picking up? Should we expect to see better margin performance as we go along?
A: Our targeted margin for next year is 10.5-11 percent given that also commodity price have gone up, I think we will still be able to in the range of 10.5-11 percent on annualised basis.
Latha: There was no demonetisation impact?
A: Not significant. There was on one of our subsidiary Shree Shubham Logistics but not at Kalpataru level.
For entire interview, watch accompanying video.