Aim to complete Sri Lankan order in 24 months: RPP Infra

RPP Infra's wholly owned subsidiary in Sri Lanka has bagged order from High Commission of India, Colombo worth USD 10.36 million. The order includes construction and completion of cultural centre at Jaffna.
The new order will be completed in 24 months and margins from that are expected to be around 10-12 percent, said A Nithya, Whole Time Director, RPP Infra in an interview to CNBC-TV18.                                     

The order pipeline is worth Rs 150 crore and that 20 percent of that was in building and 80 percent in infrastructure. The current order book for the company stands at Rs 820 crore but she expects it to touch Rs 1000 crore by September. Currently they are L1 in four orders.

The growth is expected around 25-30 percent, including new orders, she said.In the month of June 2016, the company had received additional order from the state of Madhya Pradesh for construction of Narsinghpur city worth Rs 45.4 crore.Below is the verbatim transcript of A Nithya's interview to Reema Tendulkar and Mangalam Maloo on CNBC-TV18.Mangalam: Can you tell us what are the kind of margins you will enjoy on this order and secondly what will this take your order book to?A: The order is from High Commission of India. In Indian rupees, its value is around Rs 70 crore and this job was won by our wholly-owned subsidiary in Sri Lanka.Reema: What is the timeline of completion?A: It is around 24 months and we are expecting margin of around 10-12 percent from this particular order.Reema: Now your order book would be at?A: As of now, the order book is around Rs 820 crore.Mangalam: Any funds that you will have to raise to execute this order?A: No for this particular order there is no need to raise any fund since the department itself is giving advance and apart from that with the existing working capital we can manage.Reema: What we have picked up from our sources is that the company is looking to raise some money in the second half of this financial year in fact you had held even road shows to meet some domestic as well as global funds, is that true? Is RPP Infra looking out to raise some money sometime this year?A: If it is there, I will come back to you.Reema: But you have held road shows and met global as well as domestic funds?A: No comments.Mangalam: In that case would you give some comments with regards to partnerships with multinational companies (MNCs), which will help you win bigger projects going forward, for example Siemens?A: We had a partnership with Siemens and we participated and have bid for a work in Bangla Desh with Siemens and it is in a processing phase which is not yet confirmed.Reema: Which other deals or partnerships are in the pipeline?A: Around Rs 150 crore worth of orders are in the pipeline. By September, we will be able to reach the order book of around Rs 1,000 crore.Mangalam: You said that you are likely to enjoy about 11-12 percent margins on this order but that is way below the margins that the company saw in Q4?A: This is a building type of project, so in building the margin will be 8-10 percent and apart from that since we are not doing building projects now, we are doing infrastructure and irrigation and waterline projects as the main thing.We had an experience in doing job in Sri Lanka, we thought we can establish the same thing in Sri Lanka. So more and more jobs are coming there, so we need to be there so we participated in this job.Reema: In this deal pipeline of Rs 150 crore that you are currently sitting on, could you give us a breakup how much in the building, how much in the other segments?A: Around 20 percent is in building and others in infrastructure.Mangalam: In your current order book of Rs 820 crore, how much is in building and how much is in the water supply projects and the other projects that you have?A: Around 45 percent is in infrastructure and around 35 percent is in irrigation and water line and remaining is in building and in the building itself there are two categories -- industrial building and the normal building.Reema: You were telling us that the margins in the building products business is low. It is about 8-10 percent. For the other two segments which is about 45 percent of your order book that is infra and even for waterways which is 35 percent of your current order book, what will be the margins?A: Infrastructure, the margin would be around 15 percent and irrigation and waterline, the margin would be around 15-18 percent.Mangalam: I reckon these are the segments that you would like to grow going forward?A: Definitely. Since more projects are coming in infrastructure and irrigation and waterline.Mangalam: Can you throw some colour on what are the kind of orders that you are participating in going forward specifically in these two sectors?A: In Madhya Pradesh, we have participated in a waterline project and in Karnataka also we have participated in a waterline project.Mangalam: The total order value for that would be?A: It would be around Rs 400 crore.Reema: In any way would you be participating in the ambitious Namami Gange project?A: No, we have no idea on that.Mangalam: How many orders are you currently L1 in?A: L1 in around four orders.Reema: Considering the strong order book you said your order book should be about Rs 1,000 crore by the end of September and that is much higher than Rs 725 crore order book that you had in the last quarter when we spoke to you. Could you give us a sense of what your FY17 revenues will be, will it be better than Rs 400 crore that you had earlier expected?A: I think without this order, growth will be around 25 percent but with the new order, we think that the growth rate will be 25-30 percent.