In an interview with CNBC-TV18, Nikhil Kumar, MD, TD Power Systems, discussed his company's third quarter earnings. The firm today reported a net loss of Rs 5.66 crore on revenues of Rs 112.83 crore.
Below is the verbatim transcript of Nikhil Kumar's interview with Reema Tendulkar & Nigel D'Souza on CNBC-TV18.
Nigel: A dip on the topline though the closing down of the EPC business is something that is taking place. Till when exactly could we see losses coming in from this business and when could you wind it down totally?
A: We will have losses this financial year. We are expecting another Rs 2 crore of losses in Q4 which will give a total of Rs 17 crore of losses after which we will have completely shut down the engineering, procurement and construction (EPC) business. So far about Q3 the accumulated losses are Rs 15 crore which has pulled down the number of the company on a consolidated basis.
Reema: EPC business losses are Rs 15 crore. You expect two more which means total it will be Rs 17 crore but that will be the end of it, all the poison will be out of the system?
Reema: Once that is done could you help us with the financials of the company will look like because it is dragging on your margins as well. So for FY17, what could be the margins that the company will enjoy?
A: On a standalone basis which is TD Power Systems does not include EPC business -- which is in the subsidiary -- our nine month total income this financial year is Rs 352 crore versus Rs 280 crore last year and our profit after tax is Rs 9.5 crore versus Rs 7.2 crore last year. So we have about 22 percent increase in topline and about 32 percent increase in the bottomline. We see the standalone company delivering better results next year.
We will have shaken off the EPC completely. Our EBITDA margins are still in the region of 11-12 percent and we will continue to deliver those EBITDA margins into next year. The only issue that we see in terms of visibility of business that has been a lot of turmoil in general in market and giving very accurate guidance figures beyond six months becoming very difficult.
However, domestic market still is very weak but the company has got significant amount of business coming from outside India, for example 52 percent of our sales right now is outside India, so we expect that to move up to 65 percent next year. So we are not dependent on domestic market for our business in FY17.
Nigel: I was reading a couple of reports; you cater to around 20 percent of Voith Hydro's total requirement and even in terms of GE Jenbacher, the joint venture there. What exactly is the visibility of orders coming in from abroad as you said?
A: I will not be able to talk about those marquee customers that you mentioned because I am not entitled to discusses numbers as well as specific customers but those two are important customers and we have good visibility of business from both of them going into next financial year and they will continue to be a big drivers of our sales for next year.
Reema: You acquired a German company called Platin 1255 in January 2016. We understand this company has no operations. What was the reason for the acquisition?
A: We have acquired the company to open TDPS Europe. There are two ways of doing it. One, found a company from scratch, which takes a long time or acquire the shell company and change the name.
So Platin 1255 has been acquired and we have applied for the name change, which will happen in next couple of weeks and that's the fastest way to open a company in Europe and that's the reason we did it that way.