No signs of slowdown in tolling revenue: IRB Infra

IRB Infrastructure reported higher-than-expected numbers at PAT and EBITDA level in the second quarter of FY13. The company's consolidated net profit grew by 9 percent year-on-year to Rs 121 crore in the July-September quarter due to lower than expected depreciation.

V D Mhaiskar, CMD of IRB Infra said the construction segment revenue stands at Rs 597 crore in Q2 and the tolling revenue for the same quarter is Rs 248 crore. He added that the current quarter saw 6.2% average growth in project inflows.
NHAI projects have been sluggish and its road award target for FY13 looks difficult to achieve, said Mhaiskar. He further added that they have not seen any signs of slowdown in tolling revenue. IRB Infra is not looking forward to any acquisition till March, informed the CMD.    Here is the edited transcript of the interview on CNBC-TV18. Q: Could you take us through your performance and break-up your segment wise performance, both in terms of construction and build, operate and transfer (BOT) and how you have done this time around?
A: We have done a total topline of Rs 878 crore and a bottomline of Rs 121 crore. The construction segment has given a turnover of Rs 597 crore for this quarter and tolling revenue has been Rs 248 crore. Q: Rs 248 crore of tolling revenues, have you experienced any slowdown on that account as well in the projects that are operational today?
A: No. We have seen 6 percent odd average growth. Few projects where there have been certain divergences have seen slower growth but, it is more on the revenue side. Due to high inflation the overall revenue growth has been satisfactory because most of the projects have linkage with inflation. Having an annual reset on the toll tariff compensates quite well for a bit of slowdown that might have been there. Q: On the construction side of the business, on quarter on quarter basis there is a dip that you have seen in revenues at Rs 597 crore versus about Rs 750 crore last quarter. Is there any slowdown that you are facing in that segment and what kind of margins have you delivered in the construction segment this time?
A: The margins on the EBITDA front are stable at around 26 percent but the dip is only because of the monsoon effect because usually the construction segment will see a slowdown in Q2 primarily because of monsoon. We have seen exemplary rainfall in Rajasthan this year where the key project Jaipur-Tonk-Deoli is happening. That has been one of the major reasons for a slowdown. Otherwise, there is no specific reason for any slowdown and all the sites have been progressing well. In fact we expect Jaipur-Tonk- Deoli and Talegaon-Amravati project to become operational in this financial year itself.
_PAGEBREAK_ Q: What is the new project pipeline looking like, are you becoming a little less aggressive on the bidding aspect and what is the bidding calendar looking like for the next few months?
A: On generic basis I would say that NHAI awards have been little sluggish but, as far as IRB is concerned, on the target of 300-400 kms of order addition, I think we have already added 200 km after we won the Goa border to Kundapur project. That is a 28 year concession project where we are getting Rs 536 crore of cash from NHAI.
With that project we have almost achieved around 70 percent of the annual target that we have set for ourselves. In that respect we are okay. On a general basis, I would say the target for NHAI as a whole looks a little tough for the second half because there will be a lot of clubbing of projects are expected to happen. But, on a long-term basis the pipeline is still strong. Q: Can you give us a status check on your Kolhapur IRBP project, it was expected by the month of April and then it got pushed to Q2, when is that project expected to see completion?
A: The project is completed. There was one report which from the state government asking about the quality and substantial completion certification. That report has been submitted by the government to the Urban Development Ministry and I think in this quarter itself the tolling should start. Q: While results are satisfactory the big overhang on your counter has been these recent revelations and all the allegations made with your connections with Nitin Gadkari. You have furnished some kind of a clarification but investor sentiment has been affected. How do you see these allegations and cases progressing against you and where do you see the final resolution happening?
A: As far as the allegations are concerned, we have clarified our position. We have told what the exact involvement of IRB or its subsidiaries have been and I have nothing more to add to that. People realize the real facts with regards to our limited involvement of Rs 1.85 crore by one of the downstream subsidiaries, when it was not a subsidiary of IRB. Beyond that we have nothing more to add because there is no other investment from IRB. Q: Post the MVR acquisition that you completed, are there any more on the cards that you have lined up and how much cash are you looking to deploy for these acquisitions?
A: We have a policy in place which says we will be in a position to at least deploy 20 percent of the cash accruals for acquisition purpose. With the satisfactory completion of the MVR acquisition for this year we are not seeing any more acquisitions getting added. But, we keep looking at opportunities because it takes time to go through the due diligence process and arrive at a decision to invest into something. That process will continue but, in the immediate future I don't see any more acquisitions happening till March at least.