Expect 30% topline, bottomline growth in FY16: MBL Infra

Lakhotia also said that the four build-operate-transfer (BOT) projects under it are expected to become fully functional in FY16.

Below is the transcript of AK Lakhotia's interview with Sumaira Abidi and Reema Tendulkar on CNBC-TV18.

Sumaira: It is your finance cost as well as tax expenses which have disappointed the street quite a bit. To begin with, I want to focus on this. The finance costs have nearly doubled on a year-on-year (Y-o-Y) basis. Can you tell us what your debt figure looking like is right now and what is the reason for this big surge in Q4?

A: The results are as per the business plan of the company and the finance costs are also as per the business plan. On taxation side, we have made provisions on conservative estimates basis. Profit has gone up from Rs 75 crore to Rs 80 crore and because of increased use of working capital and none fund based guarantee is issued by us, the finance cost has increased. They are as per the business plan of the company.

Sumaira: What does your debt stand at now?

A: The debt on standalone basis is on long-term basis Rs 123 crore and working capital of Rs 590 crore. So the total debt on a standalone basis is Rs 713 crore and including the build-operate-transfer (BOT) project, five of them, the consolidated debt is at about 1,109 crore. We have a long-term debt equity ratio of 0.7 percent, which is quite low and even on the consolidated basis including the working capital that is well within the industry norms of 2:1.

Reema: Can you discuss more details about the revenue growth in the quarter gone by that is close to about 9 percent. For FY15, your revenue growth was close to about 11 percent. What is the outlook on the topline for FY16? What have been the order inflows in the last quarter, which gives you visibility for the coming year?

A: The business of the company has grown as per the business plan and the overall revenue has grown by 11 percent. We have been very conservative on our bidding and the total inflow during the financial year we are about Rs 1,400 crore.

We expect a much larger inflow of orders. Currently, we have 28 projects of about Rs 3,813 crore. We expect to win about Rs 3,500 crore of orders. So the order book should increase significantly with the National Highways Authority of India (NHAI) and Ministry of Road Transport and Highways (MoRTH) awarding a lot of contracts.

Sumaira: Out of your five BOT projects, one is operational; the other four which are under-construction, would they become operational by the first half of FY16?

A: One will become operational the next month itself. By June, we should be getting the commercial operation date (COD) of one of the projects and all the others will get operational this financial year itself.

Reema: You keep referring to the company’s business plans. Can you tell us what all is a part of the business plan? What would be your internal revenue targets and your margin targets? Is this a five-year plan or give us some more colour on what the company’s business plan is?

A: We have a long-term growth story and obviously the next four-five years, are going to be good for the company. We expect to grow by about 30 percent this financial year because there will be a lot of inflow and there are a lot of orders in pipeline for us. We expect to grow on both topline and bottomline by about 30 percent during the year.

Reema: From 11 percent growth in your topline in FY15 you expect that to go up to 30 percent in FY16?

A: That is because in the last one year we have been conservative on our bidding. Now, lots of orders are flowing in from NHAI, MoRTH and other plans into this segment. We expect to grow by 30 percent.

Sumaira: When we had spoken with you post your Q3 numbers, you had said that you would need some more fund infusion to complete the other four BOT projects that are not yet operational. Are the funding requirements for that now complete or would you need to take on some more debt, etc. in FY16?

A: We don’t need to take any further debt or equity. We have already sufficient equity with us. We have infused the equity requirement of all our BOT projects except Bikaner-Suratgarh for which we have already equity tie-up and about Rs 70 crore will be invested during the current year.

All our financial closures have been achieved and there is no requirement of further debt by the company.

Reema: You have entered into an MoU with a prominent construction player in Italy called Piacentini Costruzioni, but have you won any orders or have you been qualified as L1 for any orders with this JV? What is the outlook?

A: We have already bid for a few projects into ports and we expect the result shortly. We are targeting a lot of orders into the river transportation particularly civil construction works in the civil transportation which is going to be a next dominating area apart from national highway development programme of the government.

Sumaira: What is your order book looking like at the end of Q4?

A: At the end of Q4, currently we have 28 projects worth about Rs 2,813 crore. We should have execution of about Rs 2,500-2,600 crore during the year and we should be getting new orders about Rs 3,5000 crore. So the order book should increase from here to about Rs 1,000 crore.

Reema: In the prior years, the company has been conservative in bidding for new projects, but now going ahead with your 30 percent revenue growth target, it appears that the company will be not as conservative as you have been. Would that imply that perhaps your margins would be under pressure; that the company would go aggressive in terms of pricing and bidding low for winning these orders?

A: No, we have always been having the early mover advantage into whatever segments we are, like in NHDP we have been one of the first few batch of contractors into operation and maintenance of projects; also, we have been first of the contractors.

Like that, we are one of the few companies now moving forward into the water transport as well. We have been aggressive whenever it matters. We have been conservative and it is required to be so. But going forward, we expect a lot of orders into our core competence area for there are no requirement for us to be conservative, but the EBITDA margin should consolidate going forward.

Sumaira: There were some expectations that there might be a bonus issue. Have those plans been shelved or is that something we can expect in the future?

A: The board has already recommended a bonus issue of 1:1 and that is subject to the shareholders’ approval in the AGM.