Expect reasonable business growth from metro project:Cords Cable

In an interview to CNBC-TV18, Naveen Sawhney, MD of Cords Cable spoke about the latest happenings in his company and sector.Below is the verbatim transcript of Naveen Sawhney’s interview to Mangalam Maloo and Sumaira Abidi on CNBC-TV18.Mangalam: If you could explain what exactly is happening in the company for the stock price to move about 50 percent in the last 5-6 trading sessions, any particular development that you would like to apprise us of?A: I can't tell about the market behaviour, that is not my domain basically but certainly right now we are much better if we compare to the last financial year as far as topline is concerned and earnings before interest, taxes, depreciation and amortisation (EBITDA) margins are concerned and going forward now we will be introducing certain special cables. We are trying to widen our base for special cables and especially for freight corridors we have developed 2-3 special cables which we feel we are one of the first to introduce such varieties. Soon that will be in the market.Our renewed focus is in the hydrocarbon sector for Bharat-IV and Bharat-VI. We expect pretty good business rather. Already we have got a good business in these segments.Definitely all the metros we are associated, rather this year there is hardly any metros where we are not associated. So, definitely that is another area where Cords Cable is expecting a reasonable business -- a well divided business also. As far as market operations are concerned I have no control, I can't comment.Sumaira: Also could you tell us what your order book currently stands at and what your pipeline is looking like?A: It is around Rs 110-120 crore right now, which is sufficient for about three months or so and we expect another Rs 40 crore in the month of January. Pipeline is very healthy and we expect a better business because freight corridor, hydrocarbons, Bharat VI there is a deadline and we are major player in the modernisation of all the refineries which are among 13-14 in the country.So, that is another area plus we have refocused on the exports and we have opened a separate division that is called as -- to cater to the industry sector and dealers that is a new focus, which we have now given to this particular division and going forward definitely we will be doing better, that much I can say.Mangalam: What would you mean when you say you are doing better? You did about Rs 1.3 earnings per share (EPS) in the first half of this year, can we this growing to about Rs 3 by the end of this fiscal and FY18?A: I can say as far as EBITDA is concerned, last year it was about 10.3 percent. This fiscal we expect anywhere between 11 percent and 12 percent.Mangalam: One issue that has been niggling your financials is the balance sheet where your trade receivables numbers are fairly high, Rs 110 crore in the first half of this year. What exactly is your average collection period, at the same time is the company facing some sort of working capital issue because we had seen some credit rating agencies point that out as a worry too?A: Last year it was there. Gradually we were focussing earlier on our business. So, that business and that too to the project BHEL, NTPC and other people like Larsen and Toubro (L&T) and all that, there some concerns are there, were there, but gradually we have shifted from the power sector through the metro and freight corridors plus industries sector. Further because of our better control in the growing topline we are able to extract better terms from our major creditors like Sterlite Tech, Birla Copper and other areas. So, that is another area. Internal control, shifting of the business from power to hydrocarbons, metro exports and industry sector and plus negotiating better terms with our major creditors, that is the area. We expect going forward lot of cost absorption would be there as far as finance cost is concerned.Mangalam: You mentioned about new refineries being set up, that means new business for you all.A: I have not said that new refineries are being set up. Basically as per the Supreme Court guidelines all the refineries are to be Bharat-VI compliant.Mangalam: So, are you nominated for any of those orders or will that be on tender basis?A: We are one of the major vendors shortlisted and we are into the specialty cables. Refineries means a lot of automation and we are the company who is specialising in this C&I cables.