Will exceed Rs 1350cr in rev by yr-end: ICSA

In an interview with CNBC-TV18, G Bala Reddy, Chairman & Managing Director, ICSA India gave his perspective on the quarter gone by and the road ahead.

Below is a verbatim transcript. Also watch the accompanying video.

Q: You have to first take us through your numbers. What did you do by way of revenues in the second quarter and in terms of profits in margins?

A: In the second quarter ending September 30th we have done about Rs 325 crore revenues compared with about Rs 307 crore in the first quarter ending June which is about 6% growth and the profit after tax is about Rs 29 crore odd which is about 6% growth compared to the previous quarter.

As we have explained previously that the first half will be more or less as per the guidance that we have given, not very high growth. But in the second half we expect reasonably good growth and we have order booking to the extent of about Rs 302 crore. Most of it is or about Rs 255 crore is from the infrastructure division and that too at the high end 400 kv transmission segment side and about Rs 47 crore from the embedded segment side along with the KDN of Korean company in Kerela and Jammu and Kashmir along with Wipro.

Q: Why are your profits lower than year ago levels? Last year in the second quarter you all made Rs 38.5 crore profits. So while your sales are higher year on year terms, last year you made Rs 311 crore in revenues. I am referring to the last year same quarter, second quarter. Why is it that this time your profit is only Rs 29 crore compared to Rs 38 crore last year?

A: You are absolutely right. We have two segments of business, one is the technology business that is Embedded Solutions where the revenues of that have come down compared to the previous year where we enjoyed about 28% EBITDA level margins whereas in the infrastructure we enjoy 12% margins.

The overall segment wise, 68% of the revenues contribute from the infrastructure division whereas 34% is from the embedded segment solution. When compared to the previous year it was about 60% from the embedded segment side. That is where the margin has come down on the overall aggregate level.

But if you see it segment-wise, we are maintaining 28% and 12% compared to last year as well as this year and the net level we are maintaining about 9% odd at the net profit level. So the business mix has really brought down. But the business mix slowly started moving up as we have entered into SCADA and which are going to come about 2 – 3 states are going to come out with a tenders, they are going to become system integrators.

Q: You were talking about SCADA in specific so can you just elaborate exactly on the Embedded Solutions services this quarter in specific and what is your execution pipeline more importantly going forward, when will it start actually showing in your revenues?

A: There will be about Rs 2500 crore approximately which will be coming out from each state and excise empanelled by the Power Finance Corporation to be a system integrated to participate in the bids.

So we are expecting in this quarter about 2 to 3 states to come out. Already one state has come and another 2 – 3 states will be coming out with bids, their requirements. We expect in this overall second half maybe about 3 states will be finalizing, we are expecting approximately about Rs 500 crore to Rs 600 crore.

Q: What is your percentage capacity utilization?

A: The smart energy meters in percentage utilization this year is going to be about 60% where we have started our production which manufactures about 18 lakh meters per annum.

So that along with this system integrators giving us on the meter data acquisition side as well as SCADA that we have empanelled as the system integrators we are expecting the technology business to be very optimistic in the next financial year. Revenues will be more in the next financial year.

Q: I wanted capacity utilization? In the electric meters you are saying 60%. You expect to scale up to 100% in the current year itself or FY12 will be full year?

A: Yes.

Q: And what about the other products, the infrastructure products?

A: The infrastructure business as you know has grown up substantially and we expect it to be more or less same kind of a level that we want to maintain going forward. But in the infrastructure we have moved on to the higher range of the infrastructure division from smaller to up to 400 kv level we are doing it.

Q: Is it fair to assume that you will do around 10% growth on a total yearly basis, on a year on year basis so you will cross around Rs 1350 crore this year?

A: We are expecting about 15% growth by the year end. The third and fourth quarters are going to be far better.