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Feb 15, 2011, 05.01 PM IST
XL Energy has bagged Engineering, Procurement and Construction (EPC) contract for solar power plant in India. In an exclusive interview with CNBC-TV18, K Vasudeva Rao shares the details and expectations from the contract.
“In the first 1 MW orders that we have got, we expect to close Rs 200 crore through the EPC contracts in FY11. Particularly from India, we should be closing about Rs 100 crore,” he discloses. He also says that the company’s target for this calendar year , is about Rs 400-500 crore, in terms of overall revenues, the are expecting both from the EPC.
Below is a verbatim transcript of K Vasudeva Rao’s interview with CNBC-TV18’s Reema Tendulkar and Ekta Batra. Also watch the accompanying video.
Q: Could you tell us about this EPC order which you have bagged of Rs 113 odd crore? How much will it accrue to you in terms of revenues, when will get commissioned?
A: India is opening for further energy segment in solar. There are several PPAs, both state government and Central Government, have signed with several potential investors. The first of such projects, have got financial closure and we could get the EPC contract for this. We have been discussing about another 20 MW worth projects. In the first 1 MW orders which we have got, we are seeing great possibility in this year, about close to Rs 200 crore through the EPC contracts.
Q: You expect to close the year with Rs 200 crore in terms of orders particularly from the segment?
A: We are expecting, about Rs 200-300 crore orders. Particularly, from India, we should be closing about Rs 100 crore. In the last three years, we have been only doing export income. We have been exporting to Europe and other parts of the world, and that continues to be there for module sales, going forward.
Q: What are the margins you work at in terms of these orders?
A: The gross margins will be about 15-18%.
Q: You also spoke about a huge opportunity in this EPC space. Are you all currently in any negotiations that might get finalized, maybe, in the next two months and what size would it be?
A: The first one is this and we are expecting at least another 5 MW to be closed in the next 30-60 days. So, it will be another Rs 60 crore to Rs 70 crore but before March-April, we should have substantial order booking in this segment. Typically, these orders can be executed in a six to seven months timeframe.
Q: What do you think this will do to your revenues?
A: The target for this calendar year should be about Rs 400-500 crore in terms of overall revenues that we are expecting both from the EPC, as well as, module sales to Europe.
Q: Do you expect to turn into the black, I am aware that you made a loss?
A: Yes, in the current financial year, we should be turning into positive and turning around. Whatever losses we had suffered, the mark to market losses which we incurred on carrying the inventory from 2008 at the peak rate, those write offs have been over with the December quarter. So, what we are doing right now is fresh buying of raw material. We should not have any such losses from mark to market.
Q: You did about Rs 160 crore last year; do you think you will do Rs 400-500 crore this year, in terms of revenues?
A; The year before the last, the revenue is about Rs 700 crore. Last year, we had to go through tough times, in terms of global recession and hence, we didn’t really do much in terms of that.
Tags: XL Energy, Engineering, Procurement and Construction (EPC) contract, solar power plant, Reema Tendulkar, Ekta Batra, K Vasudeva Rao
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