Order book at Rs 6700cr, to grow by 1%: Madhucon Projects

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In an interview to CNBC-TV18, G Ramachandran, CFO of Madhucon Projects said the company's order book stands at Rs 6,700 crore as on date and is likely to grow from here. "We expect a good order booking with a percentage of increase," he said.

Further, he also said that the company is eyeing capital infusion, and is awaiting an appropriate market scenario.

Below is an edited transcript of G Ramachandran's interview to CNBC-TV18. Also watch the accompanying video.

Q: How does the order book look at this point in time, in terms of size?

A: Madhucon Projects Ltd it is a listed company and the upcoming power project is for its subsidiary Madhucon Infra. Our order book is Rs 6,600 crore as on date and it should keep growing

Q: Does it look better than a year ago?

A: Absolutely.

Q: Are there orders out there because a lot of infrastructure projects are getting shelved? So how does the order book look compared to 6 months ago?

A: Absolutely, there is an increase. We expect a good order booking with a percentage of increase. The entire infrastructure industry today is one segment that is growing fast.

Q: Has pricing held up? Do you think vendors have got more competitive and are willing to offer more competitive rates?

A: Yes, because the order execution is very important. Vendors are aware that we are the leading executer and in that way the pricing also is dependent on that how we execute. We are the frontrunner on this, so that way our percentage margin is good, order booking also is very good considering our experience.

Q: Can you give us a number? What is the order book now and what was it 6 months or 1 year ago?

A: Right now it is Rs 6,700 crore. I do not have the figures but there is a definite increase.

Q: Can you tell us about your interest cost because that was one big outgo in the second quarter when your numbers came in? What is your interest payment likely to be in the third and fourth quarter?

A: The interest payment will also be in the same at par with the second and third quarter because I don't foresee any great reduction in the interest. We are already ending the third quarter now; there may be a slight decrease in the fourth quarter. However, second and third quarter, the interest will almost be same.

Q: How are you funded? Do you need to raise any equity in the near term or you are funded for most of the projects?

A: We have to think about the equity infusion. However, this is not an appropriate time considering the market scenario.

Q: So, you mean the promoters will put in money?

A: Yes both can happen - one is some dilution and the promoter also can bring in. Our equity is around Rs 7 crore plus. For a company of our size, the increase of equity is a must. The dilution has to take place but at an appropriate time.

Q: What is your debt equity therefore?

A: The debt is around Rs 650-700 crore both secured and unsecured. Equity is very small thing that has to be increased. The valuation has become a problem today, in the past one year the market is not so great. So, I think it should now improve, it's a cyclic process. Once it improves the dilution has to take place but we are thinking of doing it at the appropriate time.

Q: Your Simhapuri Energy power project is headed towards synchronization, will it start generating power soon?

A: Yes, definitely. First phase is almost on, and it should go through.

Q: So, you mean the promoters will put in money?

A: Yes both can happen - one is some dilution and the promoter also can bring in. Our equity is around Rs 7 crore plus. For a company of our size, the increase of equity is a must. The dilution has to take place but at an appropriate time.

Q: What is your debt equity therefore?

A: The debt is around Rs 650-700 crore both secured and unsecured. Equity is very small thing that has to be increased. The valuation has become a problem today, in the past one year the market is not so great. So, I think it should now improve, it's a cyclic process. Once it improves the dilution has to take place but we are thinking of doing it at the appropriate time.

Q: Your Simhapuri Energy power project is headed towards synchronization, will it start generating power soon?

A: Yes, definitely. First phase is almost on, and it should go through.

Q: You have fuel linkages tied up for it?

A: Yes, it's tied up. So Simhapuri Energy power project is coming under Madhucon Infra Ltd, which is a subsidiary.