Sadbhav Eng bags DMRC, MSRDC deals; order book at Rs 7900cr

The company has also been declared a successful bidder by Maharashtra State Road Development Corporation (MSRDC), Mumbai for a contract valued at Rs 319 crore. Sadbhav Engineering has signed a joint venture with Hindustan Construction Company (HCC) for the construction of terminal facilities for passenger water transport along the west coast of Mumbai at Marve and Borivali (Package WWT-3). The company will lead the JV with more than 51% participation share.

In an interview with CNBC-TV18, Nitin Patel, ED, Sadbhav Engineering said, the company's current order book stands at close to Rs 7,900 crore and it will be completed over the next two years.

Below is the edited transcript of the interview on CNBC-TV18. Also watch the accompanying video.

Q: You have won an order of about Rs 360 crore or so, where does that leave your order book at the end of Q1 including the execution that you might have done and also what's the outlook, are you expecting new orders?

A: After adding this order we will be close to Rs 7,900 crore outstanding order book and we need to complete this order over a period of 24 months from now.

Q: Your order book at the end of FY12 was Rs 7500 crore. You say it is at Rs 7900 crore right now. Does that include the execution parts as well in Q1?

A: I have not deducted Q1 execution. I have just added what was there at the end of March 31.

Q: What did you get in the current quarter? We are nearly at the end of the quarter, wasn't the contract in joint venture with HCC for some water transport facilities near Mumbai as well as the bus depots for Delhi Metro or the depots for Delhi Metro in the current quarter?

A: These are the two orders we have received in the current quarter.

Q: Together, how much would it be, Rs 350 crore?

A: Yes both put together, Rs 355-360 crore.

Q: Can you give us some details about what exactly you will be doing in Bombay because that's the bigger contract of Rs 319 crore. By when do you have to execute it? What exactly are you executing and what will be your money in it?

A: It will be the construction of a passenger jetty and three contracts have been declared yesterday. The first order we have won is for Borivali and Marve. The second one was for Bandra and Juhu, which has already gone to some other agency, while the third one is for Nariman Point. So, in all these, the sea transport arrangement is being worked out.

It is a part of our transportation business and our main work is piling and some kind of raising to be executed over and above the ground work. Basically, it is for making the public passage as well as the transport arrangement. This is the main civil work in this job.

Q: What are your margins in the Rs 320 crore business?

A: Our EPC margins will be close to 11-13% on the same job because this has a price escalation clause. So we did not see any negativity in this.

Q: Could you update us on Chhindwara project, you weren't able to recognize revenues from that project last quarter, it also led to a margin drop, any update on that?

A: We have started generating revenues there. The first bill in the month of April was valued at around Rs 8 crore. It has been processed and it is through now. The second invoice for the month of May is already through. We expect that from now onwards, every quarter, particularly in this year, around Rs 400 crore of the job will be executed.

Q: So what will your revenue growth be in the current year? Will you be able to increase it by 20-23% of what you did in last year or will it be even better?

A: On consolidated basis, we see there is a jump of around 20%. But, on a standalone basis as EPC, we see that it may be flat or a 5% to 7% jump may come on YoY basis.

Q: What is the visibility of future order books, say in 2012 itself or in FY13, how much do you think your order book can grow by?

A: Taking all sectors together, we are quite hopeful. Lot of new jobs have now started flowing and particularly, in the road sector, in NHAI, we are waiting for approval of EPC cash contract. But, we expect that from the second quarter onwards.

Huge number of road contracts will come because the overall target of awards, which was recently announced by the prime minister is almost 9000 Km for this year itself. So, during the last three quarters, there will be significant business opportunities there.