Unity Infraprojects bagged two orders worth Rs 184 crore and Rs 122 crore from Adani Township & Real Estate and Engineers India, respectively. The project is expected to be executed within 24 months. The company's order book as of June 2011 stands at Rs 3,600 crore.
Madhav Nadkarni, chief financial officer of Unity Infraprojects is sure of acquiring 20-25% growth for entire FY12 and 25-30% growth for FY13. Moreover, he targets around Rs 5,000 crore fresh orders during this financial year, which would contribute to the 25% growth for FY13.
Nadkarni further stated that the company would be in a position to maintain the EBITDA margins. Here is the edited transcript of his interview to CNBC-TV18. Also watch the accompanying video. Q: There has been a lot of talk of orders not coming in. There have been big complains that the order books are not growing may be at best by 5% or so. What's the situation like? A couple of bits of news indicated that you have got an order from Adani Township and Engineers India. As of June 2011, your order book was at Rs 3,600 crore. Where is it now?
A: At present, it is almost Rs 3,800 crore. We have an L1 position of Rs 1,550 crore. This year till date, we have announced around Rs 1,500 crore orders. We are waiting to convert Rs 1,500 L1 into our order book. Q: Are you reasonably sure of the ability to execute all these orders? L&T made another complaint that about 50% of orders granted were not executed for reasons like financial. Are you witnessing any trend like that?
A: As much as 76% of our orders come from government sector and 24% come from private. Predominantly, private constraint their economic situation sometimes and execution can be slow. As far as government orders are concerned, we have faced such issues in past. Once projects kick off, we will hardly face any issues. Q: Lower construction expenses have actually showed up your margins in the quarter gone by. We have seen about a 200 basis point improvement. Do you expect to hold those margins and have price escalation clauses being built in to your contracts?
A: Around 94% of our contacts have escalation mechanism. The raw material prices were subdued and there was no much impact overall other than diesel price indirect cost wise. So, we were able to hold on the margins. Going forward, we anticipate much improvement in raw material cost. Definitely, we should be in a position to maintain the EBITDA margins. Q: High working capital has been an issue and there has been a sharp rise in terms of interest cost of almost 80% in Q2. What
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