Last Updated : Apr 21, 2016 03:28 PM IST | Source: CNBC-TV18

Stone India to work towards 20-25% margins on bio-toilets order

Goenka says that due to immense amount of competition in the bio-toilets segment, they have had to sacrifise on their margins. He did not disclose the margins expected from the win.

Stone India has won an order worth Rs 28.7 crore to manufacture 9000 bio-toilets from the Chattisgarh government. It is the company's biggest order yet, GP Goenka, Chairman, Stone India tells CNBC-TV18.

Goenka says the company has had to sacrifice margins owing to stiff competition. In the current scenario, where the margins in the industry have come down to about 15 to 16 percent, Goenka aims to work for around 20 to 25 percent margins.

Stone India is in talks with several other state governments for similar orders. Their order book stands at Rs 60 crore and may cross Rs 100 crore if they win an order from a state with which they are in negotiations with.

Below is the transcript of GP Goenka’s interview with Reema Tendulkar on CNBC-TV18.

Q: If you could first take us through the key details of the order, what kind of margins are you expecting from the order? What does it take your total order book to?

A: The order is for just over Rs 28 crore. It is frankly our biggest order so far. The margins are obviously, there was competition and therefore one had to sacrifice one’s margins, but still a workable situation. I would not be able to tell you the exact margin, but it is not fair for me to tell you exactly what margins are. I am aware of it.

Q: So, while this is the biggest order for the company, the margins could be under pressure on account of competition, but in the bio-toilet segment margins have been coming off. From levels of 35 percent that we saw last year, margins have come down to levels of 15-16 percent. What can we expect in terms of a sustainable level of margins going forward, given the kind of competition we have seen?

A: In this business, frankly, a margin of 20-25 percent should be feasible on an average. Lower margins were perhaps, because of our own set up being somewhat, shall we say, not being so proactive internally. We should be now working towards an average margin of about 20-25 percent.

Q: We are hearing about the increased focus on Swachh Bharat and you also had earlier mentioned that you are in talks with several governments. How does the order pipeline look like currently and when can we expect these orders to convert?

A: Some states are working very hard like in Chhattisgarh. And there are couple of other states, we are in negotiations with them at an advanced stage with reasonably sizeable orders. One particular state, there are three contenders. We do not know how much we will get. It is an order which is much bigger than this. So, even if it is divided one third, we will be higher than this number.

Q: So what is the total order book currently and what kind of volume growth should we expect going forward?

A: On the current level, our volume, during the current year is expected to be anywhere in between – if no further orders come and just the same level as was expected last year, that will be around Rs 60 crore. Whether one which I am telling you now, if that fructifies, we will be touching Rs 100 crore.
First Published on Apr 21, 2016 12:16 pm