Order backlog to boost CCCL revenues up 15% in FY12

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Order backlog to boost CCCL revenues up 15% in FY12

Consolidated Construction Consortium (CCCL) expects revenue from project execution of the order backlogs to offset the earnings degradation that happened over the fourth quarter.

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Consolidated Construction Consortium (CCCL) expects revenue from project execution of the order backlogs to offset the earnings degradation that happened over the fourth quarter. R Sarabeswar, chairman and CEO of the company tells CNBC-TV18 that he expects sales to go up 15-16% in FY12 and order book to see strong growth henceforth.

Below is the verbatim transcript. Also watch the accompanying video.

Q: You have had maybe a decent FY11, but what's the expectation for FY12?

A: We expect 15-16% in the sales-revenue side.

Q: For Q4 specifically, the sales were up just about 1% and net profits had declined quite significantly about 95% with the EBITDA declining by about 70%. What was the primary reason for this big decline in Q4?

A: See what happened in last quarter is unprecedented increase in prices of basic materials for which we don't have an escalation clause. That has hit us badly.

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Q: So given that commodity prices aren't showing any kind of correction and you do not have any price escalation clauses embedded, do you think this margin decline will not be arrested unless commodity prices begin to decline?

A: There are two aspects. We have order backlog of around Rs 6200 crore, out of which around Rs 1100 crore job are to be taken in the earlier stages. Unless the metal prices come down, there will be a pressure on those Rs 1100 crore. However, with regards rest of the turnover, we will have an increase in margins.

Q: Could you tell us how many of your contracts are from a fixed price contracts?

A: Fixed price contracts is around 26%.

Q: For the other contracts which are variable base what kind of a pricing increase you can reflect?

A: We have a basic prices indicated in the contract, so that will take care of it. Only the job we had taken up last January ran into difficulties. Now, the new jobs, whatever we take into account, we will take care of the escalation clauses too.