New orders to push revenue to Rs 200 cr: Astra Microwave

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Astra Microwave Products recently won orders worth Rs 50 crore. S Gurunatha Reddy, CFO, tells CNBC-TV18 that the cumulative order book for the company currently stands at Rs 336 crore and they are aiming for revenue of nearly Rs 200 crore in this fiscal. "Operating margins have been consistently maintained at 25-30% with Profit After Tax margin of 12-15%," he says. 

Below is the verbatim transcript. Also watch the accompanying video

Q: You have won orders worth 50 crore in the past 30 odd days. Can you tell us about these orders in particular and what your current order book stands at?

A: Currently, we have about 336 crore orders in hand. In the last 45 days we have received about Rs 87 crore worth of orders. We have nearly Rs 312 crore of domestic orders and about Rs 24 crore worth of export orders. We are aiming for close to Rs 200 crore revenues for the current financial year and we should be able to maintain steady operating margins.

Q: Any more orders that you are currently bidding for, something which is currently in the pipeline?

A: Currently we have about Rs 50 crore worth of order which is to be booked in the next three-four months.

Q: What margins are these orders coming at because we understand that last quarter, there was a decline in your operating margins? What can we expect with respect to that going forward?

A: We are a year-on-year company; it is very difficult to justify the numbers on quarter on quarter basis because it is a project-driven kind of business. Otherwise, on a year-on-year, we have operating margins around 25-30% which we are consistently maintained. We hope to continue to do in the current financial year also and PBT is around 15-18% which we will continue to maintain. Generally, our tax rate is about 24% of the profits made, that gives us PAT margins of about 12-15%.

Also read: Raise FDI cap in defence sector to 49%, says Assocham

Q: For the quarter gone by, how much was your order inflow because we understand from some brokerage reports that post Q4 you were expecting around 100 crore in terms of inflow for this quarter in particular?

A: Last quarter we booked about Rs 87 crore worth of orders.

Q: What can we expect for the total year, how much are you executing in terms of FY12 totally?

A: Totally, we are aiming for about 200 crore of sales.

Q: Can you breakup what your domestic order book looks like because we understand that you are highly dependent on the defense space. Also tell us about your export book?

A: We have about Rs 336 crore worth of orders as of today. Out of that, domestic is about Rs 312 crore and exports is about Rs 24 crore.

Q: Where do you bag majority of your orders from in terms of the domestic space and the export space?

A: Largely, we are a defense player, that is, we support the Defense Research and Development Organisation (DRDO) laboratories and the defense public sector undertaking. Therefore, majority of these orders will come in from the defense market and we are also into ISRO related business where we get about 20-30% of revenues year-on-year.

Q: Are you facing any pressure on account of increase in employee cost?

A: No, not much increase in employee cost and there is no pressure on this front.

Q: Could you tell us what maybe the short-term debt situation of the company because the last quarter on year on year basis there was a sharp increase in your interest expense. Is that something which will continue to hurt going forward?

A: We are almost a debt-free company in terms of the long-term debt. On a net worth of about Rs 140 crore, the long-term debt is hardly about Rs 10 crore. Our interest costs of the overall financial charges, it comprises of not only the interest cost, but also the bank charges what we incur for various bank guarantees that we have to provide to defense entities.

Q: Any kind of competition that you are facing in the domestic market?

A: Basically, defense market is attracting attention and therefore, a couple of players are getting in this market. But we have to wait and see. As of today, I don't see any serious competition but down the line, it is expected to happen.

Q: How do you expect this industry to move going forward?

A: Largely this industry depends on the government policy in terms of the privatisation of defense sector as a whole, and also how the asset programme which they have initiated couple of years back are likely to mature. Therefore it depends on the government policy in terms of domestic defence production and also how the assets are going to pan out in the next five-six years.

Q: Some guidance in terms of FY12, can we expect around 25 odd crore on the bottomline with margins of 28.5% odd?

A: Yes.