KEI Industries maintains its revenue growth guidance at 15% for FY17

Mangalam: As far as your revenue is concerned the earlier guidance was 15 percent revenue growth with a 20 percent volume growth for FY17. Are you maintaining that target or will your raise it seeing quarter four performance and also what does FY18 looks like?

A: No, still we are with the same guidance, 15 percent in terms of value growth is because now the end of quarter is also there so we are seeing 15 percent growth.

Reema: What about margins, is competition putting pressure on your margins and therefore margins of 10-10.50 percent sustainable for you?

A: We will sustain the margin at 10.50 plus level because for all our institutional sale, the margins are on passed-on basis, so if copper price increase we are able to pass the increased price to our customers.

Mangalam: Engineering, procurement, construction (EPC) segment has been doing well for you of late but margins have been bit volatile out there, any word on the strategy and the road ahead for the EPC business of the company?

A: At present we are having more than Rs 2,000 crore order book position in the EPC division. In EPC we are doing the business mainly into power and electrical side. We are under Integrated Power Development Scheme (IPDS) and we are doing projects in Deen Dayal Upadhyay Gram Jyoti Yojna (DDUGJY). We are also doing some projects for the service station job. Our margin is also stable. We are targeting close to 12 percent EBITDA margin in our EPC segment including our product.

Reema: You spoke about some schemes where we have seen increased allocations like IPDS etc. Could you give us the sense of what the total order pipeline of the company looks like?

A: From the overall EPC orders, close to 25 percent is demand for our products - mainly cables. We are also seeing good demand from the government side and most of the orders have already come up. We have already bided for many contracts with various state utilities. We are quite hopeful that in the next year we will receive good amount of contracts from the government.

Mangalam: You spoke about some order outlook from the government could you quantify that for us?

A: A number cannot be quantified because in EPC division there is L1 concept. Though we have participated in the bidding process of more than Rs 5,000 crore worth of tender, so it depends on where we will be L1.

Reema: Debt is also coming to far more manageable levels. Is it time to look at inorganic opportunities, any talks that are currently under way?

A: We are repaying our debt every year and last year and this current financial year we did some capex of close to Rs 120 crore from which we had expanded our capacity base. From here also we will grow by at least 15 percent in next financial year. We are growing organically because if we find any opportunity for merger and acquisition we will do so but still we don’t have any case for consideration for merger and acquisition.

Mangalam: There was also some concern over your working capital cycle; the working capital days remember we understand went beyond that 100 days mark. What is the level or now what exactly is the target for that as well?

A: Working capital cycle is close to 90 days but sometimes our retention money because as our EPC sale is growing - at one point of time it had to be for 100 days. In future, it will remain in the range of 90-100 days because now we have reached a level wherein we are doing EPC job and it will only grow. It will grow by at least 30 percent in EPC division.