Elecon Engg bags 5 major orders; sees growth at 25-40%

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Elecon Engg bags 5 major orders; sees growth at 25-40%

Elecon Engineering has bagged five major orders worth Rs 524 crore. Prayasvin Patel, CMD, Elecon Engineering, said the new windmill gear box manufacturing plant will start functioning by October. The company has earmarked Rs 110 crore for expansion in 2008-09 and it aims to increase its turnover to Rs 1,100 crore.

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Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » ALSO READ See latest News about Elecon Eng See previous management interviews See what other Experts & Brokerages are saying about Elecon Eng Elecon Eng BSE | NSE 25/05/12 Are Mutual Funds betting on Elecon Eng?

Elecon Engineering has bagged five major orders worth Rs 524 crore. Prayasvin Patel , CMD, Elecon Engineering , said the new windmill gear box manufacturing plant will start functioning by October. The company has earmarked Rs 110 crore for expansion in 2008-09 and it aims to increase its turnover to Rs 1,100 crore.

The business expects a growth of 18-20% this year. It targets revenues of Rs 400 crore from its windmill manufacturing operations.

Excerpts from CNBC-TV18's exclusive interview with Prayasvin Patel:

Q: Can you give us an update on the recent orders, which you have won totaling close to about Rs 600 crore, the nature of these orders and over what period it will be executed and the margins and net-net your bottomline and the benefits, which you will see over a period of time?

A: Basically, we have got an outstanding order worth Rs 1,800 crore out of which we have recently got orders worth Rs 600 crore in the last fortnight or so. They are basically orders from the steel industry and a part of it from the power industry; Rs 400 crore worth of orders have been received from Bramhani Industry, which is a steel plant coming up in Andhra Pradesh and the balance has been received from BHEL; also an export order from Egypt. So this basically adds up to about Rs 600 crore.

Q: How much of this Rs 1,800 crore would we see coming in FY09?

A: Basically, the gestation period for these kind of orders is two to three years, so about I would say almost Rs 700-800 crore would get executed out of Rs 1,800 this year and the balance would be taken up in the next two years.

Q: What is your current order book to the sales ratio?

A: The current order book to sales ratio would be about 1.7 to 1.8.

Q: Also there have been some concerns on your newer business, the windmill and windmill generation business and certain orders and the time period in which they will be executed - are you sensing any slowdown in execution there?

A:  No, not really, because these are planned projects and normally they are tied up with finances, so normally there is no slowdown once the project starts off.

Q: So are you looking at starting off the plant in October?

A: Yes.

Q: What will be the capacity of this plant and how much contribution to your topline do you see coming in by way of the order execution that the windmill plant does?

A: The plant is going to start in October and is the windmill gear box plant. We are expected to do about Rs 50 crore this year, but over a period of time in the next two years we would gear up to about Rs 300 crore from that plant.

Q: What is the kind of growth that you are targeting for your company on the topline and the bottomline over the next two years?

A: We have been normally growing anywhere between 25-40% in the last couple of years. We will see to it that we maintain the same growth rate for the next three to five years.