Pratibha Inds confident of sustaining 30% growth rate ahead

Pratibha CRFG JV, a joint venture between Pratibha Industries and China Rail First Group has secured an order worth Rs 467 crore from Delhi Metro Rail Corporation (DMRC).

In an interview with CNBC-TV18, Yogen Lal, CEO, Pratibha Industries said, "With the addition of this order, our current order book stands at Rs 4,335 crore. This is a three year project. We expect to execute roughly 20% in the first year or so." "We are confident of being able to maintain 30% growth rate ahead. That's primarily because in the first two months of this year we saw fresh order inflow to a tune of almost Rs 700 crore plus. Also, we are the lowest bidder in another Rs 550-600 crore of projects across sectors," he added. Below is the verbatim transcript of Lal's interview with Latha Venkatesh and Anuj Singhal of CNBC-TV18. Also watch the accompanying video. Q: What's your order book now with this order? How much of that will be executed in the current financial year FY12? What kind of revenue will you see in FY12 then? A: The current order book of the company stands at Rs 4,335 crore with the addition of this order. This is a three year project. We expect to execute roughly 20% in the first year. And on an overall basis, we should be growing by at least 25% this year as well. Q: While your profits clearly surprise the street, a little higher than expected, one of the reasons for that was lower than expected or estimated interest costs. How did you manage the lower interests and how do you see the situation panning going forward? There were some contractors who told us actually that with any further increase in interest rates, projects will actually become unviable for them and they may not even bid? A: Yes. That's true. But the order book that we have is entirely from EPC contracts, that is cash contracts.You asked us how we manage with lower interest rates that's partially because we did a QIP and a preferential issue last year. As of now we are comfortably leveraged at 0.77. Our net debt is around Rs 373 crore against a net worth of more than Rs 480 crore. So, we are quite comfortable as far as the interest scenario is concerned. Of course, interest rates rising will definitely contribute to a rise in corresponding interest. But as of now since the leverage is quite comfortable we don't anticipate any problems in that. Also Read: Buy Pratibha Industries; target of Rs 72: ULJK Securities Q: Will you be able to maintain this kind of a run-rate about 30% topline and bottomline? Is that a run-rate that you can see in FY12 as well? A: Yes. We are pretty much confident of being able to maintain that. That's primarily because in the first two months of this year we saw fresh order inflow to a tune of almost Rs 700 crore plus. Also, we are the lowest bidder in another Rs 550-600 crore of projects across sectors. With the traction back in the order book we should be able to sustain what we have delivered in the past. Q: Operating margins were a bit of a concern in Q4. They contracted by 250 basis-points on near-to-near basis and even on a quarter-on-quarter basis by about 240 points. Was it a one-off or do you think the margins would now settle at these levels that once you reported in Q4? A: It would be one-off. Looking at our consolidated results, margins have marginally improved to 14% at the EBITDA level as against 13.9% in the previous year. So overall, we did maintain our EBITDA at 14%. This business cannot be just done on a quarterly performance alone and it has to be looked at least in the entire year's show. Q: You spoke about order book once again beginning to bloom. Is that the sense you are getting of the industry in general? Have putting out of projects by the NHAI and the other infrastructure companies increased, is there a certain spring in the step and an improvement in infrastructure and construction? A: Yes, definitely the visibility of projects has increased significantly in the past quarter. Last two years have been muted for this sector. But, if you look at our L1 position and the outstanding bids we have submitted but haven't been opened, I feel that this year should be a better year for the infrastructure sector.