FY16 revenues may fall 5% YoY: Thermax

Thermax Ltd reported 11 percent in its standalone net profit to Rs 68 crore for the year ended December 2015. The company’s operating revenue fell 8 percent to Rs 1,039 crore and order backlog stood at Rs 4,767 crore, down 23 percent from Rs 6,218 crore last year. Q3 results were in-line with expectations, says MS UnniKrishnan, MD of Thermax. Orders inflows have been subdued and orders carried in the current year were substantially lower, he adds.Going forward, he says FY16 revenue can be lower than 5 percent from that of FY15. However, he expects margins to be in double digits. Thermax could conclude some larger deals in Q4, he adds. Below is the verbatim transcript of MS Unnikrishnan's interview with Reema Tendulkar and Sonia Shenoy on CNBC-TV18.Sonia: It doesn’t seem like the worst is over for the sector and for your company just yet. Your energy segment has declined quite a bit. Take us through what the expectations are for the rest of the year and for FY17. At what point, at what stage do you expect to see a pick up in the business?A: It is expected levels for us because we already were aware of the fact that the orders carried forward in the current year were substantially lower than the previous year. So, I would look at it from the orders available. We have been able to create a revenue, which is at Rs 913 crore level, one percent lower than the previous year and the earnings for the standalone company certainly is 11 percent lower.However, the group level if you look at the consolidated both our revenues and earnings are more than the previous year. Only disappointing thing for us is related to the intake of orders subdued barely Rs 1,000 crore for the entire group and Rs 868 crore for the parent company Thermax Ltd. So that is a disappointment.The reality is that there aren’t any larger projects in the spectrum that we are operating, which are getting concluded. It is not that we have lost any orders. It is more in terms of no orders getting concluded. Though there are discussions on, nobody is concluding larger contracts at this point of time. That is overall take on the results.How will the year turnout to be -- we will still struggle to be as I normally keep telling that a double digit profitability with two and a half months more available or two months available for us to be concluding the year. For the next year predictions it will depend a lot more on how the global economy and Indian economy is going to be pairing out in terms of capacity addition. That is the only way I can predict for the next year.Reema: Considering that your order inflows have come down on a standalone basis, it is down nearly 29 percent in the quarter gone by, your order backlog is also lower by more than 20 percent. Does that not give you lesser revenue visibility for the coming Q4 as well as FY17 and therefore is it possible for FY17 could be worse than FY16?A: Let me take out the current year and next year there afterwards. Current year, I still have orders on hand, which are to be revenue recognised. So certainly we will be lower than the previous year in terms of the topline, which I predicted in the beginning.As I mentioned, about two more months available, we have got enough of capacity available. It depends a lot on customers' ability to be executing projects at the same pace that we are capable of. If they are able to walk along with us, move along with us by paying us money on time, certainly we should be somewhere near to 5 percent on topline than the last year. If that were to happen, is the double digit profitability practical? Yes, it is practical to make it happen.Coming to next year, our expectation is that we should be able to conclude some contracts of larger nature in the current quarter itself. We should run into the next year and we will have to work towards at least meeting up with the same level of performance as FY16 in the next year too. I agree with you, expecting a miracle as growth in the next year is not going to be practical looking at the global economic scenario.Sonia: You said FY17 revenues could be 5 percent lower than FY16, what about margins, at 9.5 percent how much lower could it go?A: I didn’t talk about FY17. For the current year it will be 5 percent lower. Next year we will want to work towards maintaining the same level as FY16 is what I mentioned.Reema: What about margins?A: Our target is a double digit. It won\\'t come down substantially than what it is currently at. It will not go below 9.5 and we will still try to make it a double digit.(Copy edited by Rishma Kapur, interview transcribed by Sonal Jadhav)