BEML eyes orders worth Rs 3500cr in FY14: CMD

In an interview with CNBC-TV18’s  Ekta Batra and Reema Tendulkar, P Dwarakanath, CMD, BEML shared his views on company’s financial performance and the road ahead. The company expects next leg of orders to come from the mining sector. Stating that BEML is doing extremely well in the railway segment, Dwarakanath added that it is now focusing on international and domestic orders for its construction segment.

Below is the verbatim transcript of the interview on CNBC-TV18:Q: You have managed to improve your operating margins all the way to that 5 percent mark after reporting losses over the last few quarters. What would be the margin target that you guys have set out in the next two quarters?A: Very reasonable margins at the moment because we are working on 3-4 fronts - especially on the export front of mining equipments, one. Two, railway we are doing extremely well. Third, in spite of the slowdown in the mining equipment we are hopeful of getting some major orders for mining. So we are expecting a much better number than what we have seen in Q3. At the moment I don't want to speculate on this but it will be very reasonable.

 Q: Can you detail to us what your current order book stands at?A: We have got a very healthy order book of about Rs 6100 crore as on January. January also we have done about Rs 275 crore of sale. So taking our January sales, we are standing at Rs 6100 crore order where we have majority from railways and good orders are coming from mining. Q: What was your incremental order inflow in the previous quarter in Q3?A: Ideally, this year totally as on December end, we have booked almost Rs 2400 crore of orders as on December fresh orders and January we got about Rs 100-200 crore odd. So about Rs 2600 crore is the total order in this year so far. With this order book also we are quite comfortable and we have also led a lot of emphasis on inventory control especially raw material control, finished good control and interest cost control which has definitely yielded very good results and we have to further improve it so that we have some decent bottom-line here. Q: So you are saying your execution was good in Q3?A: Yes it was good and definitely Q4 is going to be better than Q3. Our focus is on interest cost control and other inventory control which will definitely yield a positive result.

Q: What can we expect in FY15 by way of revenue growth? In Q2 your revenue growth was 28 percent, in Q3 you clocked in nearly top line growth of 15-16 percent. In FY15 what could we expect?A: FY14 March we will be definitely having minimum Rs 3400 crore plus and we could see improvement in the net sales also. FY14-15 also we have very comfortable order book position and mining also quite a few orders are expected because Coal India is going to improve their output of coal production which is going to translate into quite good orders for us. And we have quite a few other areas we are venturing into, quite a few things have been planned. Q: You said you are also looking to curtail your finance cost, you all have already managed to reduce it quite a bit, any guidance on that?A: As it is we have brought down it by about Rs 8 crore, about 78 percent we have cut down on interest cost. Q: You mentioned that you all are focusing on the mining construction sector but I do understand a lot of regional competition within that space at least all of last year or on the previous orders, is that what you are facing and hence is there any margin pressure which you would be facing within this sector?A: There are three factors in the mining construction, one is equipment, two is spare parts, third is exports. Spare parts we are going to have at least as compared to last year, minimum about 15-20 percent growth. Two, equipment side we are focusing on domestic and international. International we have got two major engagements on which we focusing very much. Domestic sector also we have very good time, dumper segment is little sluggish, we are expecting to pick up somewhere in this February end and March.