Expect reasonable growth in profits ahead: Praj Industries

Praj Industries has announced its fourth quarter results. In an interview to CNBC-TV18, Pramod Chaudhari, chairman of Praj Industries says, as on April 1, the pending order book was around Rs 800 crore. “Almost 90% of the order will be consumed this year. We expect certain more orders, which are in the pipeline, in Q1 and Q2. So, going forward, we are also looking for a growth year in front of us,” he adds.

Going forward, he sees reasonable growth rate in profits and top-line. Below is the edited transcript of his interview on CNBC-TV18. Also watch the accompanying video. Q: You have done well in terms of execution this time around. Sales growth is about 22% QoQ, but the concern perhaps remains order inflow. Despite crude being very sticky and above USD 100 per barrel levels, we haven’t seen much order inflow in terms of ethanol equipment. Do you see that improving in the near-term? A: The oil is not having direct connection. The mandates for blending of ethanol are happening in many parts of the world. That’s definitely helping us. Only thing is that because of the economical slowdown in many places, the arrangements of funds are getting delayed. But things are easing out and especially the mid-sized emerging markets are definitely taking cognizance of this move. We are quite confident that it will improve going forward. Q: In your mind, what exactly would be your pending order book? What would be your execution rate in FY13? A: We have got a pending order book, as on April 1, of around Rs 800 crore. Almost 90% of the order will be consumed this year. We expect certain more orders, which are in the pipeline, in Q1 and Q2. So, going forward, we are also looking for a growth year in front of us. Q: Between the international orders and the domestic orders, where are you more optimistic about? Do you see more order inflow from the domestic space or because of the slowdown you will be targeting more of international market? A: We are watching the situation for the last couple of years. It should not change dramatically this year. Both places we are having a balanced growth. In domestic, the growth is coming mainly from the alcohol beverage side, whereas outside is mainly the fuel ethanol side. So, both markets are growing markets. Other order book is ofcourse coming from non-ethanol activities where we are also seeing a lot of traction. Q: You are diversifying into other revenue streams as well. Can you give us a sense what sort of revenue streams would you be looking at besides your core business? How much investment can we expect? A: We have already diversified, added few more non-ethanol business line like water and waste water and critical process equipment. Those areas are seeing substantial and very high growth rate. We have seen about more than 20% portion of our business was from the new businesses. Going forward, we are expecting it to go to 25% or more. So we will continue to increase the percentage of non-ethanol activities. Q: On a consolidated basis, you have done 59% growth on net sales in FY12 and 23% on the bottom-line. How exactly would you better that? A: On profit before tax, we are substantially higher. Both top-line and profits are growing. This year we had said that we will catch up where we had left earlier and now that catching up has happened this year. Going forward, we should look for to atleast reasonable growth rate in both profits and top-line. We acquired this company from Mumbai, Neela Systems. So, the quarter performance is reflected here. But next year we will get full year’s performance so that will also add to the top-line and bottom-line. Q: How does the rupee depreciation impacting. There ere some expectations by analysts that there would be an advantage for companies like you that produces equipments in terms of competition from Chinese players, do you think that is slight advantageous at this point? A: Yes, we are getting certain advantage on the rupee depreciation. We have become more competitive. For against the pending order also the margin are a bit improving after adjusting for the imports of certain equipments which we do. But net-net it’s definitely advantageous.