See 25-30% topline growth in next 2 quarters: Diamond Power

The company expanded capacities in transmission tower and extra high voltage cable business which cost them Rs 275 crore.

New capacities have been commissioned and are expected to make a substantial impact on topline for the remaining two quarters. He said, "Power capacity of 48,000 tonne and 2,000 kilometers of extra high voltage cable means 25-30% growth in top line in the next two quarters."

Below is the edited transcript of Bhatnagar's interview with CNBC-TV18. Also watch the accompanying video.

Q: We understand that the Gujarat Electricity Transmission Company (GETCO) is awarding some amount of orders. Could you take us through what this would mean for Diamond Power?

A: Gujarat Energy Transmission Company is looking at very ambitious projects for 220 KV transmission lines. They have floated around 13 tenders. Out of that three tenders have already been awarded to us, we are the lowest for others. We have also secured one 765 KV transmission line order from Southern Petrochemical Industries Corporation (SPIC) from Agra to Jatikaran which is basically a power grid line.

Q: We also understand that you have recently expanded some capacity. In what businesses is this and by when do you expect to see proceeds? How is it likely to affect your top line?

A: In 2009 we set up an ambitious expansion project which was to cost us around Rs 275 crore. Two major components of those projects were our transmission tower business and our extra high voltage cable business. Both these projects had gone live. From the last one and a half month achieving 80% utilisation as far as tower is concerned.

As I see the order book going forward in the next seven months, we will be utilising 80% of the capacity. We have started production in extra high voltage cable and have also started getting orders. We are also using that line for producing medium voltage cables.

Both these things together will make a substantial impact on our topline for the remaining two quarters. This is because 48,000 tonne of power capacity and 2,000 kilometers of extra high voltage cable means 25-30% growth in top line in the next two quarters.

Q: Just wanted to get some perspective on the 10 remaining tenders which you said you are L1 for. Can you give us an idea on when we could hear on that ? What are the margins you would possibly be working on?

A: When we will be getting that order is for the board of GETCO to decide. But they are ambitiously pursuing this project so we should get it shortly. Once their board approves it, it’s merely a procedure. These orders are quite competitive because we are at the entry level.

In the first year of our business itself  we are able to break the barrier. We are able to get 220 and 400, 765 KV lines for which most companies spend 10 years to pre-qualify. Margins are quite competitive but on an EBITDA basis we would make between 12-14%.