Richa Industries bagged an order from the Delhi Metro Rail Corporation to build six elevated metro stations.
In an interview with CNBC-TV18, Sandeep Gupta, Joint MD of Richa Industries spoke about order win from DMRC and latest happenings in the company.
Below is the verbatim transcript of the interview.
Sumaira: To begin with, can you confirm, these are two separate orders right? What does this take your order from Delhi Metro Rail Corporation (DMRC) to?
A: These are two separate orders. One is to build six elevated stations and other is for a depot in Badli. Both are for Delhi Metro.
Sumaira: So your total order book from DMRC now stands at what?
A: Total order book from Delhi Metro is Rs 36 crore approximately.
Sumaira: And the combined order book?
A: Combined order book is close to Rs 280 crore.
Prashant: These are the first of orders that you have got from the Delhi Metro?
A: No, these are the fifth or sixth orders from metros and from Delhi Metro, third and fourth.
Prashant: What is the kind of work this involves? These are extremely well bid, margins are low, just some detail if you can on the metro orders.
A: Basically the work involved is manufacturing and assembling the pre-engineering steel buildings - that is the stations part, not a civil part, it is a steel part only and both the depot and the station.
Sumaira: Are these high margin orders? What are the margins you enjoy on these orders?
A: These are good margin although I will not say they high neither are they low margins.
Sumaira: Approximately?
A: Approximately, you can say around 8-10 percent net profit.
Prashant: This is work for the scaffolding involved in the construction or actual firm structures?
A: No, it is not scaffolding, it is a permanent structure.
Sumaira: I am looking at your nine month financials and so far, on a bottomline, you have only done about Rs 5.5 crore. You think in Q4, you can cover up the traditional Rs 10 odd crore that you do or is it going to fall short this time around?
A: It should be around the same, but we are looking forward, it should be around Rs 9 crore or Rs 10 crore from here.
Sumaira: So, in Q4, you are expecting Rs 4-5 crore on the bottomline?
A: Yes, in totality.
Prashant: So for nine months, it is Rs 5.5 crore, so in three months you would do at least Rs 4 crore in profit after tax (PAT)?
A: Yes.
Prashant: And that is mainly from?
A: Mainly from construction only because a lot of billing has been done during the last quarters and the third quarter because of the demonetisation and other issues a lot of billing could not be done. So, a lot of bills were under work in progress.
Prashant: Let us take financial year 2016, what was the topline and net profit at?
A: 2016, topline was Rs 480 crore and PAT was around Rs 10.59 crore and ratio was something around 2.21 percent.
Prashant: So, that remains approximately the same?
A: Yes, it should be around 2 percent plus only, PAT ratios.
Sumaira: Your company is already highly leveraged. Additionally, you have also approved a private placement of Rs 20 crore of non-convertible debentures (NCD). What will this be utilised for?
A: This will be utilised for taking up the further orders from the government sector. As we are moving towards the government sector, there is a lot of increase in the working capital. So, more business we are looking from the government, the more fund requirements we have.
Prashant: What is the interest cost annually?
A: You want in figures or you want in ratio?
Prashant: No, figure.
A: It is around Rs 28 crore.
Prashant: Rs 28 crore annually?
A: Yes.
Prashant: What is the earnings before interest, taxes, depreciation and amortisation (EBITDA) likely to be for the year? Nine month was Rs 34 crore.
A: EBITDA should be somewhere around Rs 45 to Rs 50 crore approximately, 10-11 percent, it should be.
Sumaira: Going back to your debt for a second, you have about Rs 350-360 odd crore in both long-term and short-term debt, right?
A: No, we have approximately Rs 250 crore. Not Rs 350 crore.
Sumaira: Can you break that up for us in terms of long-term and short-term?
A: Yes, out of that Rs 250 crore, approximately, non-fund based facilities; we have around Rs 80 crore which includes letters of credit (LC) and bank guarantees mainly. And approximately Rs 40 crore is term loans and rest is working capital.
Sumaira: What is the timeline for bringing this down?
A: That is a tough question in the present scenario, but certainly another 2-3 years, we will be looking forward to bring it down.
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