EBITDA margins to improve on back of order inflow: Skipper

Demand has picked up in the transmission industry and order inflow has increased a lot in this quarter, says Sharan Bansal, Director of Skipper.

Skipper bagged orders worth Rs 120 crore from Power Grid Corporation on Wednesday to supply transmission towers.

Speaking to CNBC-TV18, Bansal said that the volume growth has been more than 20 percent in FY16 till date and total order inflows have been Rs 620 crore for this crore.On the back of this order inflow the EBITDA margins will definitely improve, he added.Below is the transcript of Sharan Bansal’s interview with Reema Tendulkar on CNBC-TV18. Q: Give us some details about these Rs 120 crore of orders from Power Grid. What does it take your order book to? What are the kind of margins that you will enjoy and the timeline of execution? A: Essentially, as I have been saying that transmission industry has been seeing positive order inflow this financial year thanks to the government’s focus on the transmission and distribution (T&D) industry. So, we saw the orders not flowing well in the first 2-3 quarters of the year, but now last quarter, we are seeing quite a lot of ordering action happening. Last month, company secured orders of about Rs 500 crore from various domestic as well as international companies and in line with that, this is another order we have secured from Power Grid corporation now. This is for Rs 120 crore for supply of towers. We are also favourably placed in a number of other contracts. So, we are expecting those to get finalised within the next month or so. Q: Could you give us a sense of in this January to March quarter, up until now, what has been the total order inflows and how does it compare to a year ago or last quarter? A: You can say the order inflow in January to March has been these two, the Rs 500 crore plus Rs 120 crore, so that is Rs 620 crore. Overall in the year, I believe the order inflow has been somewhere close to about Rs 800-900 crore in this entire financial year right now. We are expecting, like I said, almost we had bids submitted of more than Rs 1,500 crore right now which are still to be opened and already, apart from that, another Rs 400-500 crore we are favourably placed for that. So, like I said, order book is not a problem at all right now looking at the market situation for T&D, there are a lot of different impacts, the company is bidding selectively and taking orders selectively in order to protect the margins which we have. Q: So, for the new bids that you have submitted or these recent order wins, are the margins higher, what would be the earnings before interest, depreciation and amortisation (EBITDA) margins that you will enjoy on these recent order wins? Any number you could help us with? A: Our existing operating EBITDA is one of the highest in the industry and we are quite confident on maintaining and improving upon that. Q: With these kind of order wins, Rs 800-900 crore already won so far in this financial year, you are suitably placed to win another Rs 400-500 crore of order wins. What will be the kind of revenue growth that you will enjoy in FY16? A: Our targets has been always to maintain a 15-20 percent revenue growth and we are well placed to achieve that in the coming years. So, we have now, with the order position, we are quite comfortable up to FY18. Q: But you are likely to, already nine months, you have done 22 percent revenue growth, so you will be able to surpass the upper end of your 15-20 percent guidance in terms of revenues for FY16. A: This year, because of the degrowth of commodity prices, maybe in terms of value, the revenue growth would not be plus of 20 percent, although the business volumes have definitely been plus of 20 percent. But because of degrowth in commodity prices and correspondingly the finished goods prices, we expect the overall revenue growth to be below 20 percent.