Lalit Jalan, CEO & Whole Time Director, Reliance Infrastructure in an interview with CNBC-TV18 spoke about the performance of the company and the latest happenings in the company.
He said that the company's transformation from a distribution company to an infrastructure major is well on its way. The company's four infrastructure projects became operational in FY11. "This year we will see another nine projects start generating revenue, making a total of 15 projects giving revenue from infrastructure projects," he added. The company expects to see a quantum jump in revenues from the construction business in FY12. Below is the verbatim transcript of with Latha Venkatesh and Anuj Singhal of CNBC-TV18. Also watch the accompanying video. Q: This would be a bit of a disappointment in terms of both the quarterly performance and the full year performance for Reliance Infrastructure - Revenues coming down on both counts what is pressuring them lower? A: No. If you look at the numbers and at the quality of the numbers we are very encouraged. Our transformation from a distribution company to an infrastructure major is well on its way. We had four infrastructure projects which became operational in FY11. At the end of FY11 we have six projects which are becoming revenue operating. This year we will see another nine projects start generating revenue making a total of 15 projects giving revenue from infrastructure projects. Also, the profits from operations, that is from operating businesses have gone up from Rs 1,048 crore to Rs 1,434 crore which is almost a 35% jump. The other income coming from interest income from our cash has come down from Rs 825 to Rs 556. This is because this cash is now being deployed as equity in our various SPVs. During the year we have put Rs 3,300 crore as investment in our various SPVs of infrastructure projects. So one will see this move of higher and higher infrastructure revenues and EBITDs coming from infrastructure businesses, other operating businesses and other income coming down. Q: What is the margin trajectory you can give us for the EPC business for FY12 even if for separate quarters? A: For the EPC business we have given a guidance of about 8% EBITDA margins for the last few years. We are within the range of 8% EBITDA margins. We are fairly confident to achieve those margins going forward. We will see a quantum jump in the revenues of our construction business in FY12. This is because most of the projects are under construction. Our bigger projects like Sasan, Samalkot and many of the road projects will start generating bigger revenues than we have seen in the past. So, one will see a complete change in the construction business top-line and bottom-line from FY12. Also Read: Rel Comm's got offers for sale of tower business Q: You said that there are more projects, four more projects have started generating revenues for you. In spite of it your fourth quarter revenues are actually a tad lower for you if you compare quarter on quarter. I am looking at net sales of electrical energy in your P&L as well for the full year the rise is just about Rs 700 crore. What accounted for the fall in the revenues in the fourth quarter and more importantly what kind of revenue increases can we look forward to in FY12? A: The revenues from our infrastructure projects Q4 to Q4 or Q4 to Q3 would have been higher. But, these projects are just in the start up stage you will not see a big jump in the infrastructure revenues at this stage. But, coming to FY12 you would perhaps see a total infrastructure revenue of more than a Rs 1,000 crore compared to Rs 100 crore this year. So it will become a serious business going forward. The other revenues which will be predominately our sales from electrical energy that depends a lot on the cost of power that we buy. So the cost of power that we are buying is going down and as a result the prices are also going down. Q: You said 8% margin guidance the analyst were working with a guidance or margin of abut 9% would you say that this 8% can be upped and you are being conservative in guiding 8%. A: Yes. We have been saying 8% to 10%. But, it is better to be conservative than to guide a higher number and come lower. Q: Just a word on the buy-back as well what is the process so far and how much have you bought so far and what is the plan going forward? A: We had announced a buy back up to Rs 1,000 crore up to a price of about Rs 725 a share. Till now we have bought 18 lakh shares for Rs 115 crore. We are committed to continue the buyback for the year. Q: What is the order book currently at? A: The total order book that we have is our EPC which is our construction order book is of Rs 29,635 crore Q: There were some analyst reports which spoke about slower execution were there any operational problems that lead to slower execution and will it be faster in FY12? A: Yes. We will see many of the projects crossing that threshold of 10%. One will find significantly higher top-line and bottom-line for the EPC business in FY12. Q: A word on your consolidated numbersDiscover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
