Growth to be visible from Q3 onwards: Ashoka Buildcon

High interest and depreciation cost of two new projects weighed on the June quarter earnings, Paresh Mehta, Chief Financial Officer (CFO) of Ashoka Buildcon told CNBC-TV18. The company reported consolidated income of Rs 630.2 crore and its net profit decreased to Rs 12.38 crore from Rs 36.58 crore during same period last year. "We being primarily a road engineering, procurement & construction (EPC) player, our road order book looks lower because of the low bidding, which has happened in the past two years," Mehta said. However, he expects order inflows from third quarter onwards.Toll revenue grew nearly 60 percent in the June quarter. Traffic grew 5-6 percent. Mehta expects further increase by 5 percent to 7 percent this year. Mehta expects revenue realisation from the fourth quarter of this year. Below is the transcript of Paresh Mehta's interview with Latha Venkatesh & Sumaira Abidi on CNBC-TV18. Latha: Your performance in Q1 was a bit subdued, the topline growth flat, profitability taking a hit I guess because of finance costs. Any particular reason that the finance cost should have gone higher?A: Our results for Q1 is typically low because we had two major projects capitalised in last year. Our Dankuni project and Belgaum project was capitalised and this was the first quarter where both the interest as well as depreciation was captured. So, project has being capitalised, the cost of depreciation and interest being very high - there is a very low profitability in the books. In fact, before the minority interest, it is negative profit after tax (PAT).Sumaira: In that case this 2.5 time increase that we have seen in your finance cost this quarter, do you see it coming down anytime soon or is it likely to sustain these levels?A: This will typically remain almost similar. Slightly increased because one project will get over and debt will be released. Still marginal increase, but otherwise it will remain at the similar levels.Latha: The EPC revenues contracted by around 12 percent year-on-year (Y-o-Y), any reason for that?A: Our order book has been typically around Rs 3,000 odd crore which is split into power engineering, procurement and construction (EPC) order book and the road EPC order book. Our road EPC is slightly lower than the power EPC order book. This is where the challenge is. We being primarily a road EPC player, our road order book looks lower because of the low bidding which has happened in the past two years. There is an increased scenario of bidding happening in the last one quarter and we expect to ramp-up the order book and once the order book ramps up. The turnover also will correspondingly increase after two quarters. So, though now the EPC execution is low because of low order book, we believe in the near future it will ramp up because we are expecting a few EPC contracts to come in our play.