Construction major Sadbhav Engineering reported a 46 percent growth in its net profit at Rs 39.5 crore for Q1. In an interview to CNBC-TV18, executive director Nitin Patel, says the company's order book has grown from Rs 8,000 crore to Rs 10,000 crore.
He adds the new build-operate-transfer (BOT) projects will be completed before time. The Srinathji-Udaipur project will add to revenues in Oct and Hissar and Rohtak in FY17.Patel is extremely confident of better days ahead as he is expecting bids worth Rs 15,000 crore to come up in September and a hectic bidding activity for the rest of the year.
Below is the verbatim transcript of Nitin Patel’s interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.
Sonia: Your revenue growth was aided by the fact that the Mysore-Bellary project has started reporting construction revenues. Take us through what the average run rate for revenues could like in the quarters to come?
A: The Mysore-Bellary has started generating revenue. It was the initial phase but more revenue is yet to come from the project. However, apart from that we are of the view that Shreenathji-Udaipur has done well in the quarter. Apart from that, Rohtak-Hissar and Bhilwara-Rajsamand all these build, operate, and transfer (BOT) projects are reporting execution ahead of schedule and the company is quite confident that all these projects will be completed before stipulated completion time. So, it will help us to generate additional toll revenue.
Apart from that we have seen that the traction from the other Engineering, Procurement and Construction (EPC) business is also going to start from the coming quarters to come. So, the new projects what we have won in the state of Haryana just couple of quarters back and the new order win which we yesterday what we declared from NHAI, so, the road sector is going to take a big leap over the period of time is what we understand.
Latha: First up your toll projects, how many projects are giving you tolls and what has been the rate of growth of toll collection?
A: We are having a kitty of 13 BOT projects all put together once we complete the acquisition process from Sadbhav Engineering as the other joint venture (JV) partners. However, out of these 13, nine projects are generating revenue as of now and four are under construction. However, under operation projects during the last one year as we have seen that the growth in the toll rate, we have seen almost between 5 percent to 15-16 percent in terms of the actual traffic across the special purpose vehicle (SPVs) actually. The last year was quite impressive in terms of the toll revenue.
Latha: These remaining four, when will they start generating toll?
A: Shreenathji-Udaipur has just nearing completion. We are expecting that Shreenathji-Udaipur should start generating from October onwards. Bhilwara-Rajsamand, Rohtak-Hissar and Mysore-Bellary all three are going to complete ahead of schedule based on the construction phase how it is going on as of now.
Latha: Give us a time; is it in FY16, FY17?
A: Bhilwara-Rajsamand will be operational in FY16 and Rohtak-Hissar and Mysore-Bellary will start generating revenue early FY17. So, one year from now we are expecting to complete all the four under construction projects.
Sonia: What is the current order book of the company and how much in terms of fresh orders did you receive in this quarter itself?
A: We are basically L1 and we have declared yesterday so now we have crossed more than Rs 10,000 crore worth order book mark now. Out of this, we can say that almost around a Rs 2,800 crore worth of job we won during the previous quarter basically Q4 of the last year and Q1 of the current year.
Latha: You were speaking about the NHAI orders, are you L1 in several of them? Can you give us an estimate of how much the order book will grow by in the end of this year?
A: The growth of the order book will depend upon the bidding strategy. However, we also told earlier in the same channel that there is a huge traction in the road sector and a lot of bids are there in the pipeline. Even in September itself we are expecting almost around more than Rs 15,000 crore worth of job are there for bidding and going forward it is continuing. Even the new hybrid bidding also now NHAI has put for bidding. So, we will see this continue for this year as well as coming couple of years we are going to see a hectic bidding activity in the company itself and even in the sector also. We are quite bullish about the road sector for the coming period of time.
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