Elecon Engg eyes 15-20% revenue growth ahead

In an interview with CNBC-TV18, Hemendra C Shah, CFO of Elecon Engineering said the company is aiming to achieve 15-20% growth in revenues. 

Below is the verbatim transcript of Shah's interview with Sonia Shenoy and Ekta Batra of CNBC-TV18. Also watch the accompanying video.

Q: Tell us more about how business is shaping up? The last time we spoke you indicated that from the next couple of quarters onwards your overseas acquisitions would start to wreak the benefits. Where does the order book stand at this point? What would you do in terms of profitability from here on? A: We have completed our overseas acquisition on November,26, 2010. We are going to consolidate the financial performance of Elecon Engineering from the date of acquisition to March,31. In that particular situation, we can expect that the turnover of revenue and the profit for the last four months will be reflected in the financial statements of Elecon. At the same time the total acquisition has been split into two. 75% of its revenue of the total acquisition will come in Elecon and around 25% will go into a Elecon's group company that is Power Build Limited. On an annualized basis, total revenue growth which we expect in 2011-12 will be to the extent of Rs 225 - Rs 230 crore. Again splitting, 75% for Elecon and 25% for the Power Build Limited. Regarding the order book positions, we have already booked the orders worth Rs 909 crore as of January,31 and addition of Rs 92 crore we have received in the current month. We further expect to receive orders around Rs 170 to Rs 200 crore by March end.

We are definitely poised for a comfortable position for the next year as well. We expect to achieve the growth of around 15% to 20% conservatively, excluding the revenue which is coming from the acquisition part. Q: Can you talk about what the margin picture would do once these acquisitions do start contributing? What exactly would you do possibly on the bottom line as well? A: Definitely, these are profit generative companies. We are looking at it on a long term basis. Initially, it will be in the range of 3% to 10% margin on acquisitions. In the long run, it will significantly improve because the synergy will emerge over a period of one to one-and-half year. This will be reflected on a long term basis in the performance of Elecon too. Q: You have some plans to do some more acquisitions as I understand. Where would you look for these and what part in terms of geography? How would you be coughing up the funds for these acquisitions? A: This is an ongoing process. Whenever we find any suitable opportunity coming our way we always try to grab it. As of now, it will be too early to say anything on that particular front. In another eight months or 12 months we may come out with some good news for such type of acquisition.