While the standalone business has performed better than last year, the company has made losses on a consolidated basis as it shut down the loss-making engineering, procurement and construction (EPC) division and EPC subsidiary company, taking a one-time hit, says Nikhil Kumar, MD of TD Power System.
TD Power System posted a weak quarter with total income falling 36.6 percent to Rs 118.7 crore against Rs 187.1 crore the same quarter a year ago. Despite this, the company expects topline to grow 10-12 percent this fiscal, Nikhil Kumar, MD of the company.
In an interview to CNBC-TV18, Kumar said while the standalone business has performed better than last year, the company has made losses on a consolidated basis as it shut down the loss-making engineering, procurement and construction (EPC) division and EPC subsidiary company taking a one-time hit, he said.
TD Power's current orderbook for the manufacturing business stands at Rs 300 crore, he said, adding, there are good prospects in this segment for the company.
While demand is declining domestically due to slow capex cycle, international markets have compensated for the home losses in past quarters, Kumar said, adding, exports contribute 70 percent to the total revenue.
Below is the verbatim transcript of Nikhil Kumar's interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.
Sonia: What went wrong this time and how are you foreseeing the demand situation?
A: The numbers that you have are on consolidated basis. If you separate the numbers out then on a standalone basis TD Power has done better compared to last year. We have Rs 474 crore of topline versus Rs 420 crore from last year. Our profit after tax (PAT) is Rs 15 crore versus Rs 17 crore last year because this year we took a write-off of about Rs 5 crore on a contract that we were executing in India about three years ago and the money is not going to be forthcoming, so we decided to take a write-off of Rs 5 crore. Otherwise the profits would have been higher this year compared to last year.
However, in addition to that on a turnover of Rs 474 crore that we had last year, we had an EBITDA of Rs 50 crore. So we are about 10.5 percent EBITDA in line with the commitment that we had made to the street so far.
Latha: You are still loss making. Does that change anytime soon?
A: No. Loss making on a consolidated basis because on a consolidated basis we had an engineering, procurement and construction (EPC) division and EPC subsidiary company, which took a loss of Rs 20 crore. This was a onetime hit that we have taken because we shut the company down, so we have taken a large hit to make sure that we do not have any further losses in coming quarter. This was a onetime hit, the market was aware of it. We kept all the analysts informed about this write-off. So that is the reason why we see this big loss coming in this year. Otherwise we see the manufacturing business still strong and good prospects for the current financial year and mainly coming out of exports; we see 70 percent of our revenues coming out of exports this year, about 10-12 percent growth is expected both on the topline and bottomline. So India still continues to be weak.
Latha: Should we expect that next year your revenues will be what you did last year. This year you say is an aberration, so should we expect 25 percent?
A: A topline of Rs 475 crore so conservatively I want to say 10-12 percent growth right now and no EPC losses which will give a great boost to the bottomline at least it won't take away what the manufacturing group is doing. So, much better performance in the company in this coming year for sure.
Sonia: What is your order pipeline looking like? Where does the order book stand at and if you can give us a breakup between the export and the domestic order book?
A: In manufacturing business we have about Rs 300 crore of order book right now and out of which exports plus deemed exports is 64 percent and 36 percent comes from the domestic. So we have a book of about Rs 200 crore for this year which we will do.
Latha: What are your export destinations?
A: Mainly Germany, Austria, Japan, Norway, a lot of the developed countries that selling a lot of machines in the gas engines, gas based power plant, a lot of large and small hydro power plant in Norway, central America etc.
Sonia: When we spoke to you the last quarter also your order book was at about Rs 300 crore and this quarter as well. So are you telling us that the order book is stagnated between last quarter and now?
A: The order book on the domestic side is declining because we are seeing that the capex spending in India hasn't picked up. We are seeing an increase on the export side for example last year we were at about 55 percent export and deemed export, 45 percent domestic and now the pending order book reflects something like 65-35. Therefore, what has happened in the past few quarters is that what we have lost in the domestic business has been made up in the export business but on overall basis we are standing still. We need to have a strong domestic market to show great result otherwise we are going to be showing around 10-12 percent growth, but for us to get back into 20 percent plus growth, we need a strong domestic market which we are yet to see.
Latha: On consolidated basis you will be in green in FY17?
A: Yes definitely because EPC losses have been completely written off and we have adequate provision and even in worse case situation we do not see anything coming into this year.The Great Diwali Discount!
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