Kamal Singal, CEO, Arvind Infra is very happy with the company’s full year performance. It has a strong topline growth of 32 percent. Bottomline in terms of profit after tax (PAT) grew over 62 percent to Rs 17 crore. He is confident of maintaining the growth rate of 30-40 percent going forward.
The company’s FY16 revenues stood at Rs 11.5 crore versus FY15 revenues of Rs 87.05 crore and PAT stood at Rs 17.2 crore versus Rs 10.60 crore for FY15.
However, long-term borrowings were up to Rs 43 crore in the fourth quarter versus Rs 22.7 crore for the corresponding quarter of the last fiscal.
Singal said the debt-equity is around 0.62 times and going forward, too, it aims to maintain it at those levels. The total debt is around Rs 90 crore.
It is an Ahmadabad-based real estate company and a part of the Lalbhai Group Company. Bangalore is now the company’s second destination, said Singhal.
Arvind Infra was demerged from the parent company Arvind Limited last year with promoters and investors getting proportionate shareholdings. So far the promoters have infused Rs 50 crore through the preferential route.
The unbooked inventory stands at Rs 342 crore.
Below is the verbatim transcript of Kamal Singal's interview with Reema Tendulkar and Sonia Shenoy on CNBC-TV18.
Reema: While your quarterly numbers are looking good, we have seen a big jump in your revenues profitability, the street is a bit worried about the balance sheet pressures. Your long term borrowings have nearly doubled. The trade receivables have gone up manifold to about Rs 65 crore versus Rs 7 crore. Could you walk us through the key reasons for that?
A: You are right. All in all, the year 2016 has been very satisfying year for us and the company has registered very strong growth both in terms of topline and bottomline. The topline as you said grew by 32 percent and bottomline in terms of profit after tax (PAT) grew by more than 60 percent to Rs 17 crore, but yes, there has been an increase in the debt. Now the debt obviously has to do with the growth that we have envisaged for ourselves, despite it going up in numeric sense, it has not really gone up in terms of overall debt-equity. Right now the debt-equity has been significantly below one and it's hovering around 0.62 percent.
All in all, while we are growing and we need funds for growth and funding our pipeline which is supposed to remain healthy during this growth phase. We think that the debt level are well within manageable limits and in fact this is one of our strategy pillars whereby we have set ourselves the target that as and when we keep growing and we keep needing funds for growth, we don’t want to leverage our balance sheet beyond an acceptable limit and we want to keep it well below a debt-equity ratio of one.
Sonia: Can you give us what the absolute number is, what is the total long-term debt that the company is sitting at and say by the end of the next one year what will the debt be?
A: Total debt as of now is around Rs 90 crore and we want to maintain debt equity of 0.62 percent by the end of coming financial year as well. If we need more funds, obviously we will need more funds for the growth and we are quite hopeful of maintaining this debt-equity by infusing either debt or equity in a proportionate, we keep up to the standards that we have set for ourselves. In fact, in the very recent past promoters have infused more funds into the company through equity route and obviously that is going to help us in maintaining the debt levels at very-very acceptable and healthy levels.
Reema: What about the company’s growth? You said its about 30 percent growth in the topline in FY16, what’s the company’s revenues growth projection for FY17 and also key projects?
A: The company has grown very steadily in the last couple of years and most of the parameters like topline and bottomline has grown between 30 percent and 40 percent in the previous year and this year we have grown topline by 32 percent and PAT has increased by 62 percent. I think we are on a very strong footing and the company is all set to maintain this momentum. In the coming years as well, we hope that we will be able to maintain and we are obviously targeting growth rate similar to what we have achieved in the last two years.
Sonia: Can you tell us little more about what is the exact unrecognised revenue that the company has for FY17 and what are the projects that are currently underway that will be launched, say over the next six months?
A: As of now the total pipeline of unbooked sale that means the sale which has happened in terms of getting the sale converted from customers’ point of view is Rs 342 crore. This sale might not entirely come into the books of account of financial year 16-17 because unbooked sale is a constant moving number. You keep selling and the kitty keeps on going up and you keep booking as and when respective project completes certain stage of completion and that’s how the accounting standard works, but as of now if we were to give a number, the total unbooked sale at this point of time is around Rs 342 crore.
Reema: You are also expanding and diversifying away from Ahmedabad. You have entered into the Bangalore market you got a project at Jakkur as well as Shivanahalli. What are the kinds of margins that you are likely to enjoy on your Bangalore project and are you planning to acquire land in FY17?
A: Bangalore has been our second destination. We did quite a few projects in Ahmedabad and Bangalore has been our second market. We have already executed and completed one project which is Arvind Expansia in Whitefield. After that we are in the middle of executing one large apartment project in North Bangalore in Hebbal, it is called Arvind Sporcia. We have sold more than 80 percent of that project already. The Shivanahalli project that you are talking about, it is an upcoming project and this should be launched very soon maybe in first quarter itself.
Generally, as a thumb rule we are operating at an operating level margin or the earnings before interest, taxes, depreciation and amortization (EBITDA) level of around 30 percent. This year our operating EBITDA margins are 32 percent as compared to last year’s overall margins of around 29 percent and we hope that the coming year will be very similar to what we are doing or what we have done in the last year.
Sonia: Just wanted your views on the amount of money that the promoters have infused so far, how much is it and what is the plan that the promoters have, any more money that they would be infusing through the equity route?
A: As you know, Arvind Infrastructure was demerged from the parent Arvind Limited last year and promoters and other investors got proportionate shareholding at the time of demerger. However, subsequently promoters have infused Rs 50 odd crore through preferential route and that’s the money which has come in addition to the initial investment which was brought in by the parent company. Now going forward as of now there are no concrete plans in terms of how much money will be put in or how much money we will need, but depending upon our growth requirements a combination of debt and equity is obviously on the cards and in future we will be able to say how much money will be required from both these routes.