BEML's current orders give revenue visibility till FY19-20 and the company is expected to report profits for FY16, says P Dwarakanath, CMD of the company.
Earthmoving and heavy industrial equipment maker BEML has incurred a net loss of around Rs 100 crore in the 9 months of FY16. However, P Dwarakanath, CMD of the company expects the financials to improve going forward.
Speaking to CNBC-TV18, he says he is hopeful that the company will report profits for FY16. BEML's current orders give revenue visibility till FY19-20 and earnings for Q4 are expected to be better than Q3, he adds.
The company has recently bagged Rs 900 crore Kolkata Metro Order. Talking on the same, Dwarakanath says each of the company's metro projects provide it with substantial margins.
Further, he says the company expects revenue contribution of around 11 percent from defence, 36 percent from rail and 50 percent from mining in FY16.
Below is the transcript of P Dwarakanath’s interview with Sonia Shenoy and Latha Venkatesh on CNBC-TV18.
Sonia: If you could start off by telling us about whether your earnings before interest, taxes, depreciation and amortisation (EBITDA) losses will reduce because the stock has been under intense pressure over the last 6-8 months, and as we know, the nine months of this year, you have still reported an EBITDA loss and a bottomline loss of about Rs 102 crore odd. Do you see things improving any time soon?
A: It will definitely improve. That is for sure. So, we will come out with the numbers, once we finish our mandatory work here. It definitely is going to improve.
Sonia: When you say going to improve, when can we expect the company to turn into the black?
A: Last quarter is going to be quite good and ultimately, for the year end, it is going to be quite good. That much I can tell you at the moment.
Latha: But, for the year, will it be a profit?
A: Yes, definitely.
Latha: You turn into the green this year itself?
A: Yes, that is for sure.
Latha: Can you tell us about your order book, especially this Rs 900 crore Kolkata order? How long is it? What margins does it fetch?
A: Right now, we are executing almost 400 odd vehicles for Delhi metro and for one more extension of Delhi metro. That will take us right up to 2018. And the Kolkata metro will kick in from 2018 to 2019. So, we have got enough of metro orders which have got very substantial margins that will keep us going right up to 2019-2020. And considering the great momentum that has already built up in the metro market, definitely, we are going to have many more, especially Nagpur, Ahmedabad and Bombay.
Latha: How much did you say is from Delhi that will last you from 2018?
A: I will tell you, right now we have a project RS-10, we are going to do about 300 odd vehicles and then, RS-13 is about 94 vehicles. 394 vehicles have to be executed to Delhi Metro alone. In addition, Kolkata metro is about 84 vehicles. That will keep us engage right up to 2019-2020. That year we are booked quite heavily.
Latha: How many crore rupees is a 100 vehicles?
A: It depends upon the kind of scopes of what we have, but ultimately, the bottomline is very good for all three projects.
Sonia: So, in FY17, how much do you think your sales can get ramped up to?
A: Traditionally, we make about Rs 900-950 crore on metros which have a very good margins and then recovery of fixed cost if very substantial in these metro projects.
Latha: What is very good – 10 percent, 8 percent, 12 percent?
A: I do not want to come out with the numbers because we are in a very competitive field. We are very good, especially metro projects are quite substantially, give us good margins.
Latha: What part of your business is metro? What part is defence?
A: Defence, last year for example, FY15, we had only 5 percent. 5.5 percent was the defence segment. And this year, FY16 is going to be almost 11 percent, most likely. And, FY17 is almost going to be about 20 odd percent. There is going to be a substantial jump in defence from 11 up.
Sonia: You had earlier said that you will see net sales of Rs 4,175 crore in FY16, is that correct?
A: No, that is all the memorandum of understanding (MoU) numbers. That is not the target what we had. We have been telling that point also very clearly, that we are not going to get those numbers what we had as the MoU targets, but the numbers what we are going to have is going to be reasonable growth with respect to FY15. So, with FY16 numbers, on growth front, on sale, net sale front, we will be quite reasonable. I can tell you that much very clearly.
Latha: What will be the contribution from mining and construction for FY16 itself. How much is rail and metro? How much is mining and construction?
A: It is about, 11 percent will be defence, 36-37 percent will be rail and the rest 50 odd percent will be from mining. And mining, as I can tell you very clearly, we still hold on our majority control. Over dozer market, we are almost 70-80 percent. Dumper, we are giving a terrific competition to our two major players and we still win on L1 basis, quite a few orders. So, we are competitive and we are here to stay and we make up further with space and services also.
So, there is no more any concern, some quarters expressed whether we can take on the competition. We are in competitive mode for decades and we shall be there and we shall fight it out to the finish.
Sonia: So, you are saying that in FY16 itself, by the end of the year, you will turn into the black?
A: FY16, yes definitely.The Great Diwali Discount!
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First Published on Apr 12, 2016 10:57 am