Apr 10, 2012, 06.29 PM | Source: CNBC-TV18
In an interview to CNBC-TV18, PR Easwar Kumar, chief financial officer of BGR Energy Systems says that the company has bagged two orders from NTPC.
“We expect the revenue to be in the range of more than Rs 5,200 crore in 2012-13 and EBITDA margins to be in the range of 12-13%.” said Kumar.
Kumar further says, Rajasthan bid is expected to be finalised in the first quarter and the company has also bid for projects in Maharashtra, in Madhya Pradesh, Orissa and Gujarat.
Below is an edited transcript of the interview. Also watch the accompanying video.
Q: You have bagged two orders from NTPC, by when are you expecting the other four units on Meja and Raghunathpur?
A: Yes, we are expecting the other two units by the end of this month. We have received order for Solapur 2x660 mw, amounting to Rs 1,855 crore. These projects are expected to be executed in 48 months. The first unit is expected to be completed in 48 months and the second unit in 54 months, six months later.
Orders from Meja and Raghunathpur are expected by the end of this month. Each order is nearly worth Rs 1,855 crore. With this, the total order size for the boiler would be Rs 5,500 crore. We expect another Rs 3,000-crore order from turbine in the coming month.
Q: Give us a sense on what exactly would this do to your P&L in terms of an incremental increase in revenues for FY13 out of your total order book that you are executing. what margin can we expect?
A: Excluding NTPC orders, we have an order book of Rs 8,200 crore. With these orders it would go up to about Rs 16,000 crore. NTPC orders will fetch Rs 8,500 crore. We expect the revenue to be in the range of more than Rs 5,200 crore in 2012-13 and EBITDA margins to be in the range of 12-13%.
Q: Are you expecting any change in import duty on equipment?
A: There is news about customs duty to be levied on import of power equipments. We expected that it would come under current Budget but it did not happen but we are still hopeful that it should happen in near future because many of us are putting up very large facilities in terms of investment into the country for manufacturing of supercritical equipments. So it is only rightly done that. We have a level-playing field when the imports are happening at much lower rates.
Q: How much are you bidding for additional tenders, for example, how much can we see in terms of a possible incremental order flow for your FY13, how much are you targeting?
A: We have bid for projects of value close to Rs 17,000 crore, which is expected to be finalised in the next six-nine months. With this order coming in for the current year, the order book has already gone up by Rs 8,500 crore and we expect the order book to further go up. Rajasthan bid is expected to be finalised in the first quarter and we have also bid for projects in Maharashtra, in Madhya Pradesh, Orissa and Gujarat.
Q: There are some reports that suggests that some of the orders received by Chinese companies are being cancelled because of poor order quality?
A: As an EPC contractor, we are doing two projects. One for Tamil Nadu, Mettur 600 megawatt and other in Rajasthan two units of 600 megawatt where we are importing equipments from Dong Fang of China, and we are not facing any problem. The Mettur project will be commissioned very shortly and Rajasthan project will also happen in next three months.
As far as supercritical projects are concerned, we strongly believe that the state and central utilities will order equipments only from Indian manufacturers as per the guidelines of Central Electricity Authority (CEA). We do not see a situation where a state or central utility would buy imported equipment. Their preference would be to companies who are putting up facilities in India.
Q: What exactly is the capex lined up for the company. how much the company is investing. when would it come on stream and would you all have any fund requirements for the same?
A: As of now, we have already invested about Rs 250 crore into the joint ventures. We have two JVs, one for the boiler, BGR Boiler Private Ltd and one for turbine which is BGR Turbines Ltd. Till March 31, we have already invested Rs 250 crore, we need to invest another about Rs 700 crore which will be spread over the next two-three years.
For this investment we would not require any additional funding as it is spread over a period of time. As far as the completion is concerned, we plan to start civil construction in July. We expect the boiler factory to be ready in next 12 months and the turbine factory should be ready in about 18 months.
Q: How much improvement in margin is expected once these manufacturing facilities are ready?
A: These are very large equipments that need to be manufacture at the factories. It would take some time to be stabilized and also the indigenisation to take place in India. We expect that over a period of three-four years, about 75-80% indigenisation would take place and then the margins can improve substantially.
BGR Energy stock price
On February 12, 2016, BGR Energy Systems closed at Rs 96.70, down Rs 5.2, or 5.1 percent. The 52-week high of the share was Rs 152.20 and the 52-week low was Rs 89.40.
The company's trailing 12-month (TTM) EPS was at Rs 7.36 per share as per the quarter ended December 2015. The stock's price-to-earnings (P/E) ratio was 13.14. The latest book value of the company is Rs 186.29 per share. At current value, the price-to-book value of the company is 0.52.
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