Changing macro environment to benefit company: Orbit Crop

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Changing macro environment to benefit company: Orbit Crop

Bad luck continues to plague infrastructure company Orbit Corporation which has posted disappointing results yet again. However, managing director Pujit Aggarwal maintains a positive outlook going forward.

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Bad luck continues to plague infrastructure company Orbit Corporation which has posted disappointing results yet again. However, managing director Pujit Aggarwal maintains a positive outlook going forward. "Whether it is sales, regulatory environment or the overall workings, we are seeing better times. So we should start seeing an uptick again," he said in an exclusive interview to CNBC-TV18.

For the quarter gone by, Orbit recorded meager 10,000 square feet sales in Mumbai. "But sales this quarter are robust, so I am expecting Rs 100 crore plus at least," added Aggarwal.

Conversely, rising interest rates are hurting the company's profits.

Below is an edited transcript of his interview with Sonia Shenoy and Latha Venkatesh. Also watch the accompanying video.

Q: It has been tough times for Orbit for the past many quarters. Is it looking like from the lower single digit profits you are moving in to losses as well or do you think this is the worst you have seen in terms of earnings?

A: If you remember, I had told you that the first two quarters were looking bad. However as we move forward, we are seeing that the external macro environment is changing for the better and from here we would be seeing positivity. So whether it is sales, the regulatory environment or the overall workings, we are seeing better times. So from hereon, I don't think you will see a dip in terms of going into losses but you will start seeing the uptick again.

Q: Give us an idea of how many million sq feet you could sell and more importantly what are you expecting in the next two quarters?

A: Unfortunately this is Mumbai so question of million sq feet does not arise. We were able to sell about just 10,000 sq feet approximately for a value of Rs 24 crore and that is all we could sell last quarter.

Having said that, let me also tell you that we are expecting sales in this quarter and the next quarter to be much more robust. I expect it to be at least Rs 100 crore plus.

Q: What kind of realizations are you hoping to see for the amount that you have targeted?

A: It would be a little premature to give any kind of forward looking numbers, so all I can say is that is it a very positive terrain. I had earlier said that we hope to achieve the same closing as what we did last year and that is what we are working towards in terms of achieving that kind of a top-line and bottom-line.

Q: One of the main things has been worried about has been interest cost and how it has dented your bottom-line. What is the way forward in terms of that? How do you think interest cost can reduce and how are you planning to manage debt?

A: We have a total borrowing of Rs 851 crore against the net worth of Rs 1050 crore, so we are at 0.8 ratio which is comfortable from macro perspective. However, the cost of interest which was around 12%-12.5% has escalated all the way up to 15%-15.75% which is where the real hit came, which has been taken between the EBITDA margins which are still at 28%. On the other hand, the net margins which are just at 5-6%.

So all of us are seeing that the high interest rate regime is almost at its peak, and going forward it will come down. Even input cost, whether it is cement, steel or labour will come down in the next few quarters. So we will be seeing numbers adapt and stack up whether it is good top-line and the bottom-line becoming much better. So I think we are at the peak of the pain which is now almost over.

Q: What is the sales target for the year end, if you have any target in mind? Also, from the projects in progress, which one are you expecting to see the fastest and the best revenue recognition in the next 6 to 8 months?

A: We are seeing that as far as Orbit Terraces and Orbit Haven are concerned, we are be seeing tremendous progress and tremendous revenue recognition. These are two numbers that will add up for us.

As far as sales are concerned, we expect that from hereon at least Rs 300-400 crore of sales is what we will be targeting. We hope to achieve that and we are confident the way things are going and people are visiting our sites so incrementally we should be able to archive about Rs 300-400 crore.