See Rs 4000cr order book by the end of FY13: McNally Bharat

McNally Bharat Engineering has had a steady order inflow and it has won several orders worth Rs 600 crore in the recent past. Deepak Khaitan, Chairman of McNally Bharat Engineering said their order booking was slow last year and there has been a significant increase with a growth of 10 to 15 percent this year. Going ahead, the company is hoping to close the year with a Rs 4000 crore order book.

Khaitan further added that civil construction is going to be the company's largest segment in a few years. Apart from this, urban housing is expected to improve McNally's overall margins. Here is the edited transcript of the interview on CNBC-TV18. Q: What is pleasant about calling you and discussing things with you is that you are one of the few companies announcing orders in a fairly regular fashion. You recently won orders amounting to Rs 600 crore, can you tell us what is your order book looking like and how much has it grown in the past quarter or maybe year to date?
A: We had a slow start last year. Our order booking was slow and therefore, sales numbers in the coming year will be moderated. McNally Bharat has been growing at a frantic rate and we expected to maintain the growth but, because of the order booking last year, we are not able to do it this year.
However, we still grew by 10-15 percent in a very competitive infrastructure sector. Our order booking at the moment is around Rs 2,000 crore and we are hoping to close the year at about Rs 4,000 crore. There are a couple of large orders which we are in negotiation with. We hope to have a good order book that will give a good momentum for the year ahead. Q: If you reach Rs 4000 crore, how much would you have booked in FY13 itself? How does that compare to what you would have booked in FY12?
A: In FY12, last year to date we had booked only Rs 600 crore worth deals. We have also booked orders worth Rs 2200 crore and the big boost is coming from a new vertical which is civil construction. We already have an order book of Rs 900 crore. Out of Rs 2200 coming from civil construction, we hope to take it to about Rs 3000 crore. Q: Out of this Rs 2000 crore, how exactly is execution panning out for the company?
A: This Rs 2000 crore order book which we booked in the current year basically is the order completion of 18 months to two years. Therefore, we will only start executing the Rs 2000 crore order book in the last quarter.
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Q: The other question which I wanted to touch upon is the civil construction segment which you briefly touched upon. It is quite a growth driver for you, Rs 900 crore in terms of current order book, tell us how exactly competitive bidding is on that civil construction in order for you to boost it up. What are the margins looking like and what is the incremental order inflow?
A: Being an engineering, procurement and construction (EPC) company we already have a very large civil group. Therefore, we wanted to expand our civil job profile and we successfully managed to do that. This is going to become our largest vertical in the years ahead. The order booking is across sectors. We are into housing, roads, bridges, housing sector. Q: Is urban housing the new big area?
A: It is a new vertical. Civil is a new vertical. It means that we have now started booking orders from outside. Earlier, we were only in the civil part of the EPC, we were only doing civil jobs for our own company and for orders which we got. But, now we have moved outside that area. I have a very strong group going ahead because we really feel that after Larsen and Turbo there is a big gap.
 
Q: How do margins work in this because you were at 7% and 8%, it was not a margin that would give much joy? Does this urban housing segment improve the margin or depress it further?
A: No it will improve margins. We are booking orders at double digit plus.