Expect revenues growing 7-10% in FY17: NCC

NCC, which has had a good fourth quarter, has said that the company's asset monetisation strategy has helped bring down interest costs.The company's debt levels stand at Rs 1,182 crore and it received a cash consideration of Rs 200 crore from the stake sale to Sembcorp in the fourth quarter, YD Murthy, Executive VP, Finance, NCC, told CNBC-TV18. The company plans to reduce its debt to Rs 100 crore in FY17, he said.Going forward in FY17, NCC expects a 7-10 percent revenue growth and clock EBIDTA margins of about 9 percent, Murthy said.In the March-2016 quarter, NCC's topline grew 11 percent to Rs 2,452 crore from Rs 2,210 crore in the year-ago period. EBITDA jumped 13 percent to Rs 209 crore from Rs 185 crore it posted in March-2015 quarter.Below is the verbatim transcript of YD Murthy’s interview with Surabhi Upadhyay & Nigel D'Souza on CNBC-TV18.Surabhi: If you could us tell us in terms of your order book where you stand and earlier you had told us that this year you would be executing the order book worth of almost Rs 8,000 crore. Have you been on target with some of those numbers?A: For a year as a whole we have achieved a topline of Rs 8,325 crore, which is almost more or less same like the last year. There is substantial improvement in the net profit. We have reported a net profit of Rs 222 crore as compared to Rs 111 crore last year that is a 100 percent jump in net profit. Company is doing very well and also the asset monetisation has helped us to bring down the debt level, so substantial saving on the interest burden also has happened.Surabhi: Can you give more details on that asset monetisation, how much have you sold off in Q4 and where does your debt level stand right now?A: In Q4, the Sembcorp deal was consummated. On a net basis we received about Rs 277 crore as per the agreement signed by us. In fact, that is the amount we have given earlier as an indication to the market and the investors. So, the deal is completed and bulk of that money has gone towards debt reduction in the books of a parent company. The debt at the end current financial year is about Rs 1,882 crore.Nigel: You are looking at bringing down that debt by the end of this fiscal? What can the debt level come down to and also your margins, they are hovering around that 8.5 percent approximately? Earlier you had told us that you expect the margins to go up to around 9-9.5 percent are you on track?A: We are very much on track. For the year as whole FY16, we reported an EBITDA margin of about 8.8 percent and the asset monetisation also has happened. Already reduction of debt has happened. Some more assets are likely to be sold in the current financial year. For example, the Western UP Tollway Ltd and also the Bangalore Elevated Tollway for which we have signed the definitive agreements but the money is yet to be received.Nigel: How much will you get from there and could you tell us what will you debt come down to by the end of this fiscal and also the margins you said it will improve substantially from this 8.5-9 percent? What can we see in FY17?A: These two road assets we are likely to receive about Rs 200 crore; a part of it will go towards working capital and part of it will go for reduction of debt. Our aim is to see that debt levels come down by at least Rs 100 crore by the end of current financial year.As far as the margins are concerned, Q4 we reported EBITDA of 9 percent but for the year as a whole it is around 8.8 percent or so. Next year, that is current financial year FY17 we are likely to report EBITDA margins of 9.25-9.5 percent.Surabhi: What gives you that confidence? What are the kinds of projects that you are hoping to execute in FY17 that will lead to this kind of a bump up in margins?A: The earlier low margin order are disappearing out of the order book and the current order book comprises of orders received in FY16 as well as FY15. These orders have come with better margins and also the commodity prices have softened. That is also showing improvement in our margins and also the operational efficiencies has improved. We are likely to go back to our normal level of EBITDA of about 9 percent and above.Surabhi: You will go back to 9 percent EBITDA this year hopefully. What is the pipeline looking like right now? If you could tell us as of now you are L1 in how many different orders and how are you looking at the first half of the year?A: We have a decentralised structure for order bidding. Across the country we are bidding and pipeline is usually at any point in time Rs 500 to 600 crore. However, what is more important is we are targeting higher order accretion in the current year and yearly Rs 12,000 crore.Surabhi: Rs 12,000 crore is the execution target for FY17?A: No, that is a fresh order accretion target.Surabhi: What about the sort of execution that you are looking at off this order book that is building up?A: We expect a 7-10 percent of topline growth in current year compared to last year.