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Last Updated : Aug 13, 2012 03:05 PM IST | Source: CNBC-TV18

Sales, EBITDA margins bring good numbers for Gammon India

Parag Parikh, ED, Gammon Infrastructure, says that the first quarter results of the company has been over and above the top-line and includes Mumbai-Nashik-Vizag assets.

Parag Parikh, ED, Gammon Infrastructure, says that the first quarter results of the company has been over and above the top-line.

Below is the edited transcript of his interview.

Q: Your performance has been good this quarter. How exactly was execution and whether this is a sustainable trend in the coming quarters especially in terms of margins?

A: Our first quarter result has been over and above top-line and it includes Mumbai-Nashik-Vizag assets. We have also added Kosi Bridge, which was commissioned in February last year. We couldn't recognize the entire revenue in Q4, so the entire annuity income is recognized in this quarter.

Once this project is commissioned, income will flow over the year and therefore our revenues numbers will go up. Most of these annuity jobs have high margins because the operating or maintenance cost in relation to these projects is very low, so it helps in enhancing the EBITDA. The bi-annual annuity income for the project is little over Rs 32 crore.

Q: What were the other sources from the non-annuity projects?

A: Besides Kosi, the two existing road annuity jobs of Rajahmundry and Andhra constitute in the revenues. On the non-annuity side, Mumbai-Nashik Expressway, this is being tolled, so it will be an entire quarter of revenue. So it will be there in the immediate preceding quarter.

Q: In BOT project what was the additional and specific revenues in those projects and what is the growth of revenue over the quarter?

A: Annuity from Kosi will be added up entirely. There is flattish income from Rajahmundry and Andhra. Our toll income has gone up on Mumbai-Nashik expressway, because last year on quarterly basis we had commissioned only 64% compared to the entire road being commissioned. In Vizag port, we are doing a volume of over 1.3 million for the quarter and that will be added to the revenues.

Q: What is your guidance on the bottom-line of the company going forward? What would your interest costs be, would it sustainably reduce over the year?

A: For Kosi bridge project, revenues will flow for the whole year. Gorakhpur Infrastructure project is at the advance stage and Rajahmundry Godavari Bridge project is expected to be commissioned over this financial year.

So these projects will not only add to revenues and top-line but even enjoy higher EBITDA margins. In relation to profitability and interest cost; interest correspondingly will go up to the extent that these projects get commissioned as much as one collect revenues. Even the interest cost from a capitalization phase moves into the income statement. But those are in the ranges of 80-90% being financed by debt costs and most of these are debts taken at the SPV levels based on the cash flow streams of each of these projects.

Q: How does the order book look?

A: According to NHAI estimates, in last six-seven months we have won order over Rs 5,000 crore in the road sector. The cost will be significantly higher by the time work gets started. Immediately, there are not many new bidding activities coming up for the next quarter. Currently, our focus is on consolidating and achieving financial closures on these projects and getting them started.

Q: Are all of these BOT or annuity or are any of them pure contracting jobs?

A: All of these are BOT projects, all of these are pure toll roads, non-annuity and non-EPC.

Q: What is your update with regards to your tie-up with Simplex Infrastructure as well as progress on the Jaipur Metro?

A: On Simplex tie-up, we had won Vijayawada to Gundugolanu six-lane project which is over 100 km and at a revenue share of Rs 57 crore annually. In this partnership Simplex has 49% share and we have 51% share. It is a significantly large project. NHAI estimate's it to be above Rs 1,600 crore. Mahulia-Kharagpur project was won by Simplex and we have bought in 49% equity.

So, both the projects are sponsored co-developed. It mitigates risks if you look from either Gammon or Simplex point of view, both in terms of execution and equity infusion and broadens base. Jaipur Metro project is still at a very early state of qualification and nothing has happened.

Q: You have done Rs 100 crore in EBITDA. Should we assume same prorata for the year?

A: Correct, you can assume in similar range. We reported EBITDA margins of 55% in the last quarter of last year and this time it has gone beyond 60%.

Q: Do you have any plans to raise funds. We understand that you had an approval for a rights issue?

A: Correct. We are waiting for the right time for raising capital. Currently, our capital raising is more towards internal generations as well as securitizing of existing projects.


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First Published on Aug 13, 2012 01:32 pm
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