Expect 10-15% higher margin than last year: SPML Infra

SPML Infra has won multiple orders totalling Rs 250 crore for power and T&D and the margins are likely to be 14-15 percent. The company has bid for projects worth Rs 8,000-9,000 crore in wastewater management across Maharashtra, Gujarat and Delhi.

Speaking to CNBC-TV18, Subhash Chand Sethi, Chairman of SPML Infra, said that margins are likely to be in the 10-15 percent higher than the last year. The company's current order book stands at Rs 4,000 crore plus and the debt is at around Rs 800 crore.

The company has won Rs 260 crore in arbitration award and disbursements are likely to be made this year, he said.

Below is the verbatim transcript of Subhash Chand Sethi’s interview to Reema Tendulkar & Nigel D'Souza on CNBC-TV18.Reema: We know the total size Rs 250 crore, we know it will be executed in 18-24 months, if you could then tell us what the IRR or the internal rate of return that you expect on these orders, what are the margins and what does it take your order book to?A: We have quoted with about 14-15 percent EBITDA on these orders. These would be executed in 18-24 months and it is a decent margin, about 14-15 percent margin we are having in these jobs. Today the order book now it will stand at Rs 4,000 crore plus. Nigel: What is the order book pipeline looking at if you could tell us that and also what is the opportunity you see from waste water management? What is the total size over there and from that particular market or that particular order book what kind of an order can you get from there?A: Water management order also there is quite a lot in pipeline. We have bid substantial amount of bidding in Maharashtra, Gujarat and Delhi which are yet to be opened. L1 position is yet to be decided and these are quite sizeable. We have bid for more than Rs 8,000-9,000 crore worth of biding. Reema: Let me come back to the point you made about order book. You said it is roughly Rs 4,000 crore post this win. When we spoke to you about six months ago, in the month of July, you had said the order book was about Rs 600 crore. Should we be worried that perhaps renewals are not coming in?A: No, we didn’t say Rs 600 crore. Reema: No, Rs 6,000, it was higher at Rs 6,000 crore in one of ours previous interactions, if I am not mistaken?A: There is a lot of order executed in pipeline also.Reema: Have the order win slowed down? A: No, we got about Rs 800 crore in January and this Rs 250 crore now which in these two months have become Rs 1,000 crore approximately. Nigel: Your total order book is at Rs 4,250 crore now?A: Yes. Nigel: We wanted to ask you about the arbitration payments, have they started flowing in if you can give us an update on that front? What was the total amount that was outstanding?A: We have Rs 260 crore plus outstanding on arbitration awards which we have already received and there are certain arbitration which are in the pipeline.Nigel: So that is around Rs 500 crore I believe?A: Those are in pipeline, but whatever we have received we are in touch with the government and the files are moving. Hopefully we should get a substantial amount in this year. Reema: Rs 260 crore is approved, you are just waiting for the disbursement to take place?A: That is correct.Reema: How has the quarter been, you indicated that you have seen orders worth Rs 1,000 crore in the January to March quarter. How is the execution been and what should be the kind of revenue growth margins we should expect from you - for the company on the consolidated basis?A: I will not be able to tell you the figure right now because there are so many things happening in next 25-30 days because March is the crucial period for execution. However, it will be 10-15 percent higher than the last year. Nigel: Often we forget that when an infra company is wining orders also their debt is going up and that could be a bit of a worry going ahead for example I think your market cap currently is what sub Rs 250 crore. You have a good order book of more than Rs 4,000 crore, but what about your working capital requirement, what about the debt in your books, if you could give us some clarity on that number, what is it gone to and do you have any kind of plans to start paying off some part of your debt?A: The debts are in a comfortable position. We have not taken much debt because we have not gone into many build–operate–transfer (BOT) projects, we have engineering, procurement, and construction (EPC) companies. The challenge in EPC companies have happened because they have gone into the investment projects which was a mistake on the part of the EPC companies. Nigel: What is your current debt, if you could give us that number?A: It is about Rs 800 crore.