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Last Updated : Feb 17, 2016 03:14 PM IST | Source: CNBC-TV18

Expect margins of 7-9% on new projects: Valecha Engineering

Satish Watve, President-Project, Valecha Engineering, says the company's debt at subsidiary level is at Rs 550 crore.

Valecha Engineering has won orders worth Rs 400 crore for the rehabilitation and upgradation of Chhattisgarh's NH-43 and for constructing rail flyover (harbour line) at Kurla in connection with Mumbai CST-Kurla 5th and 6th lines project.

Speaking to CNBC-TV18, Satish Watve, President-Project, Valecha Engineering, says he expects margins of 7-9 percent on the project.

The company's total orderbook is at around Rs 1650 crore, but its debt at subsidiary level is Rs 550 crore, he says.

Below is the transcript of Satish Watve’s interview with Nigel D’souza and Reema Tendulkar on CNBC-TV18.

Nigel: You have got a significant order of close to around Rs 400 crore. Could you give us certain details like what are the timelines of this particular order, what are the working capital requirements and also what are the margins you will enjoy on this particular order?

A: We have an upgradation of the road project at Chhattisgarh of Rs 308 crore. We also have a railway flyover for about Rs 90 crore in the city of Mumbai near Kurla. Together, they make Rs 400 crore of the project that we have recently bagged.

And the timeline for this project is about 24 to 30 months for which we have to complete. We normally execute the projects within reasonable bottomline between 7-9 percent. That is it.

Reema: Could you help us with your current order book and how does it compare with a year ago. Has there been a pickup in the order inflow momentum? Any numbers to validate that?

A: we have an order book of about Rs 1,250 crore. That was the pending order book and with the addition of this Rs 400 crore, it becomes about Rs 1,650 crore on the order book now, as on today. And, the projects have different durations so, we expect that between 20 to 30 months, taking the previous orders into consideration, we should be in a position to execute this works.

Nigel: Then things are looking quite good, but I need to ask you about your finance cost. Now, it is at around Rs 20 crore on a quarterly basis, so can we assume that in fact, what is your debt number that is my first question and secondly, when exactly can we see you moving into the black on the bottomline? Because the last quarter as well there was a small loss, from the next quarter onwards can we see a profit number coming in?

A: Our debt number will be in the range of about Rs 350 crore.

Nigel: But you are paying around Rs 20 crore on a quarterly basis, on a yearly basis, that should be nearly around Rs 70-80 crore. So, your interest rate is only around 5 percent?

A: I am telling you the consolidated figures and not the standalone figure for the cost of finance because we have been paying off certain more of our capex. In the previous year, certain have accumulated this year, so it will have to be brought into details. But what I can say is today, the numbers, we are standing at Rs 350 crore.

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First Published on Feb 17, 2016 03:14 pm
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