Expect new projects to add Rs 175-200cr to topline: Gammon Infra

Gammon Infrastructure reported weak set of numbers in its third quarter result on Thursday.EBITDA fell 30 percent to Rs 117 crore year-on-year (YoY) and the company went through a loss of Rs 10 crore against Rs 6 crore profit in the same quarter last fiscal.In an interview with CNBC-TV18, KK Mohanty, MD of Gammon Infra said that the newly acquired projects can add Rs 175-200 crore to the company's revenue on an annual basis.Below is the verbatim transcript of KK Mohanty’s interview with Reema Tendulkar & Nigel D'Souza on CNBC-TV18. Reema: No doubts that this has been a very disappointing quarter for you any particular reason why your margins were so much under pressure? Were there any cost over runs which impacted you all and also if you could guide us for a revenue growth as well as your margin performance in Q4 January to March? A: First of all let me correct that as far as performance is concerned we are on track. The topline has increased we have added two additional operational project to the basket. There are some anomalies in to the accounting numbers because we added two projects into operation last quarter only November. So, interest came into the play and that pulled down the margin. The operation has not been fully stabilised by that time, so that is one of the reason. However, if you see the topline on quarter to quarter bases we are having a growth Rs 257 crore which takes us beyond Rs 1,000 crore on a annualised basis and that was our initial target. In the standalone basis also we have shown a growth because the construction projects which are under implementation has picked up and that is why the numbers are higher. On the standalone also our profit margin have gone up because we have started delivering and showing more productivity in the under implementation projects. Nigel: Give us some guidance that the total income, the consolidated total income from quarter four (Q4) onwards what will it look like and also margins for this quarter have come in at roughly around 45 percent do you see it going higher from here. Finally your finance cost as well they have spurted up so do you expect it to stay around at Rs 70 crore on a per quarter basis? A: Two projects which has come in to the operation is one Pravara cogeneration plant, power plant and Godavari Bridge in Andhra Pradesh, two are become operational in the month of November first week. That has added to the additional interest cost that is why the interest cost has gone up because the operational project date has come off. Going ahead naturally this will be the indicator to quarter to quarter basis topline above Rs 250 crore. As you are aware we are in the midst of a slum sale which might happen we are in the last leg once those operational projects goes out naturally the topline will take a hit. However, we will have cash in your hand that will be the different situation. If you see on overall basis our performance is on track and next quarter results margins wise should be better. The EBITDA will in the range of 50-55 percent in general because this was the first quarter of two operational projects added in the month of November that is why the EBITDA margins looking slightly low. Reema: What will be the increase in revenues because of these two projects which you have recently commissioned Pravara as well as Rajahmundry? A: In annualise basis it should be around Rs 150-175 crore. Reema: You also indicated that your plans to divest the nine assets are in the last stages will it be completed in the Q4 quarter by March? Will the money come in by them? A: We are not in the process; I think it is already a public news that we have signed share purchase agreement (SPA) with Brookfield. As we are in the last leg it will happen within a week or so. Reema: So the money will come in soon? A: Yes. Nigel: Could you tell us what is your current order book? What does it stand at and also what is your execution plans going ahead? A: For a development company to ask about order book is slightly difficult question. Unlike, if we see construction companies we don’t take orders it is like asset basket. So, today our asset basket is in order of around Rs 20,000 crore. Once we sell the project, it will deplete by another Rs 3,500 crore. The projects under implementation will be two projects which are likely to be completed in two years time. We have some projects; we are on pre-development stage so that needs to take shape. We will have still around two operational projects in road and two operational in port that should give addition size still to operate and add more assets as the opportunity comes in to the basket. So, looking forward the asset baskets should increase. Though this government has come in to power for last two years time still the performance has not been in the expected line and the overall basis in the economy so hopefully this situation will turnaround faster and will have better opportunities.