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Feb 14, 2013, 04.54 PM IST | Source: CNBC-TV18

Gammon Infra to commission 3 key projects in 12-15 mths

Parag Parikh ED & CFO, Gammon Infrastructure Projects, says that the company has posted cash profit of Rs 122 crore for nine months in FY13.

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Parag Parikh ED & CFO, Gammon Infrastructure Projects said the company managed to post good set of numbers despite challenges faced by infrastructure companies. The company reported huge jump in revenue aided by Gorakhpur and Kosi Bridge projects. The company plans to commission three key projects in next 12-15 months, full year revenue for which will come in FY15.

"Annuity projects which were commissioned over the last nine months tend to reflect higher margin over the initial years due to the flattish nature of these revenues. On account of that, our EBITDA has increased a little over 72 percent compared to 53 percent reported earlier," says Parikh.

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Below is the edited transcript of his interview to CNBC-TV18.

Q: This time your company reported huge jump in revenues. How much did Mormugao Seaport contributed to this revenue figure? 

A: The infrastructure industry at this point of time has had its own sets of challenges in the form of land acquisition, financial closures, environment-forest clearances and non-decision on the regulatory and government front. Amidst all these times, we have had small successes. In January, Mormugao Seaport was awarded the concession agreement.

On our financials, the Gorakhpur infrastructure project has been commissioned and we have received the provisional completion certificate which is effective from March 31 2012.     

This has resulted into recognition of the revenue for the project for the entire nine month period. So it adds up for nine month annuity revenue of the Gorakhpur project. 

The Kosi bridge project was also commissioned in February 2012. Both these projects have added to our revenues, on nine month comparison and quarter comparison Gorakhpur project has added for the entire recognition in this quarter.

Q: Which projects are expected to come up for commissioning in next three months or so? Will Rajahmundry project be commissioned? Can you highlight next two-three important projects which will add to revenues?

A: Currently, we are at the stage where at least three of our projects are likely to get commissioned and will generate cash flows. The Kosi and Gorakhpur projects started over this year. Projects like Rajahmundry Godavari Bridge, Bagasse-based power project in Pravara and Indira Container Terminal at Bombay Port will be commissioned in the next 15 months, more towards the last quarters. We may not see full year's revenue for these projects, but in FY15, all these projects will show full year revenues.        

Q: How are things moving with the Jaipur Metro corridor? Are you facing any stress after the episode that NHAI has had with several other infrastructure companies?     

A: Gammon Infrastructure is not associated with this project --it is more on the group entity. However, Gammon Infrastructure posted decent set of numbers, especially the EBITDA margins. Annuity projects which were commissioned over the last nine months tend to reflect higher margin over the initial years due to the flattish nature of these revenues.

On account of that, our EBITDA has increased a little over 72 percent compared to 53 percent then reported earlier. However, it has its own depreciation impacts both in terms of provision for future periodic maintenance as well as assets amortization over the life of the concession.

From cash profit perspective for nine months, we may be in the range of Rs 122 crore compared to Rs 53 crore. So we are doing reasonably well. The industry is however facing some challenges but with some assets getting commissioned, it finally puts a stop to the delays and potential cost overruns that can happen during the projects under implementation. All are put to a stop and one can begin to see generation of revenues.

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