Expect 15-20% margin on new order: EDCL

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Energy Development Company (EDCL) has won a Rs 20 crore order from the government of Maharashtra.

In an interview with CNBC-TV18, Sanjiv Saraf, ED, Energy Development Company (EDCL) says, it is a small order, but it is a very prestigious project. "The expected margins on the order would be around 15-20%," he adds.

In the power generation field, he says, the company will be implementing 15 hydro projects in the country up to 750 mega watts. "They will start coming on stream from 2014 onwards. The total capital outlay for these projects is around Rs 6,000 to 6,500 crore," he adds.

Below is the verbatim transcript of his interview with CNBC-TV18's Reema Tendulkar and Ekta Batra. Also watch the accompanying video.

Q: Can you give us an update on this Rs 20 crore order that you have won? It's a small order, but can you talk about margins on this order. What sort of execution we could see? What would this take your entire order book to?

A: This is a small order of Rs 20 crore from the government of Maharashtra. It's a hydro project of 10 mw; a very prestigious project. It is very large head machine and we will be executing it for government of Maharashtra. The expected margins would be around 15-20%.

Q: There are two businesses from the company; one is on the contract side and the other is on the power generation. Could you tell us your plans in reference to power generation? What is the kind of capacity that you are planning to implement?

A: In the power generation field, we will be implementing hydro projects, 15 projects in the country up to 750 mw. It includes around 700 mw plus in Arunachal Pradesh and around 20 mw plus in Uttarakhand.

Q: When will this come on stream? What is the kind of investment you have lined up, equity and debt for implementing these 750 mw of projects?

A: They will start coming on stream from 2014 onwards, 2014-15-16 and 2017. The total capital outlay for these projects is around Rs 6,000 to 6,500 crore.

Q: Can you talk about the fund requirement up till 2014 which you have?

A: Fund requirement till 2014 would be to the tune of around Rs 1,000 crore.

Q: How exactly are you funding this Rs 1,000 crore?

A: Both from internal accrual and having some strategic partners in equity and raising the debt.

Q: Can you breakup the debt to equity? What sort of funding are we seeing within this Rs 1,000 crore and the breakup between debt to equity? What is the strategic investor you possibly would be looking at?

A: We will be looking for strategic investor as well and also from our internal accruals.

Q: Can you breakup the debt to equity for e.g. if in Rs 1,000 crore, how much will you be raising via debt, how much will be internal accruals, how much will be equity and within equity will it only be strategic investors or will it be other means and forms as well?

A: It will be combination of all.

Q: The reason why we are asking you so much on equity is because your marketcap is only about Rs 100 crore. How much are you looking to raise via equity? How much is possible?

A: We would like to answer on this later because we have given mandate to some people to work on this.