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Last Updated : Feb 10, 2016 02:45 PM IST | Source: CNBC-TV18

Focus to be on aerospace, defence, nuclear biz: Walchandnagar

Speaking to CNBC-TV18, Pillai said that main focus will be on manufacturing projects hereon than engineering, procurement, construction (EPC) ones.

Product mix and operational efficiency aided bottomline growth in the third quarter ended December 31, GK Pillai, MD & CEO of Walchandnagar Industries said.

The company posted a 22 percent decline in its revenue to Rs 129 crore and operational efficiency (EBITDA) improved to Rs 28 crore in Q3 as against a loss of Rs 46 crore in the same quarter last year.

Speaking to CNBC-TV18, Pillai said that main focus will be on manufacturing projects hereon than engineering, procurement, construction (EPC) ones. The main areas of interests would be defence, aerospace and nuclear business, he added.

The company’s current orderbook stands at Rs 1,250 crore of which approximately 20 percent or Rs 250 crore are from the defence business, he said.

Below is the verbatim transcript of GK Pillai's interview with Reema Tendulkar & Nigel D'Souza on CNBC-TV18.

Nigel: The numbers this time around, you have reported profits but on the topline we have seen a bit of a dip though margins have improved substantially. Do you expect more of the same going ahead and are these margins sustainable also for the next quarter?

A: Definitely the last quarter has been good for the company. The last two quarters, we have broken the trend and we are on a positive profit before tax (PBT) trend. There has been, on account of the product mix, more on the manufacturing side than the engineering procurement and construction (EPC) side, and at the same time, bringing in a lot of operational efficiencies within the organisation.

Going forward, I am confident is that we will be keeping the same trend which will help the company.

Reema: Are they sustainable and how do you foresee your margins in FY17?

A: One of the reasons which we are having a tough time in the last couple of quarters was with regard to the two large EPC projects which we have been doing one in Tamil Nadu Electricity Board (TNEB) for 12 projects and at the same time, another one at Ethiopia for a large sugar and cogen plant.

We have made a big beginning that we have completed the first of the 12 projects on January 29, it was inaugurated by the Chief Minister of Tamil Nadu. So the emphasis will now be over the manufacturing products which constitutes the defence, the aero space, the missiles and the gear business.

Nuclear also is part of the manufacturing business, but the nuclear business has been slightly dull for the last couple of years with not much of an order inflow in the nuclear segment.

So I am confident that the same trend should continue and we are trying to work towards continuing the same thing.

Nigel: There is a note in accounts which suggests that there is around Rs 27 crore worth of stock in respect to orders that have either been put on hold or they have been cancelled, also give us an update about your order book, you haven\\'t seen any kind of traction there, what currently does it stand at and where exactly has it headed?

A: At present our order book is almost about Rs 1,250 crore of which about 50 percent comes from the EPC business and another 50 percent from the manufacturing business. So this is a very good mix of orders which will help the company sustain, in the same manner in the next coming quarters.

At the same time, more focus in the coming years and coming quarters will be more on the defence and aero space business in which the company has been a leading technological player over the years, though in terms of numbers, we would not have been a large player, but in terms of technology, Walchandnagar Industries has been in the defence for a pretty long time and we want to encash on this strength of ours in the years ahead.

Reema: What were the order inflows in the quarter gone by and what can we expect in the coming quarters in terms of order inflows and of this Rs 1,250 crore what percentage would constitute defence orders?

A: The defence order in Rs 1,250 crore is almost about 20 percent, of about Rs 250 crore, which is a present backlog as of defence orders.

(Copy edited by Rishma Kapur, interview transcribed by Sonal Jadhav)

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First Published on Feb 10, 2016 11:04 am
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