Out-of-court settlements with OMCs hit Q4 show: Man Industries

Carbon steel line pipes maker Man Industries has had a dismal March quarter with total income slipping nearly 47 percent to Rs 343 crore from RS 654.8 crore in the year-ago period. RC Mansukhani, Chairman of Man Industries told CNBC-TV18 that out-of-court settlements with some oil and gas companies hit the company's performance in the quarter. The company has an order book close to Rs 1,400 crore and has bid for projects worth USD 2 billion, globally, he said. The order book is picking up on increasing transmission lines and we expect FY17 to be better, he added. He expects an order from GAIL on Tuesday.During the quarter, the company's EBIDTA fell 76.9 percent to Rs 16.7 crore from Rs 72.3 crore in Q4FY16, while EBIDTA margins slipped to 4.9 percent from 11 percent in the year-ago quarter. Man Industries' net profit, too, fell 41.5 percent to Rs 26.2 crore (YoY).Below is the verbatim transcript of RC Mansukhani’s interview with Ekta Batra & Anuj Singhal on CNBC-TV18.Ekta: It has been quite a tough quarter for you all. Your revenue was down around 47 percent on a year and year basis. What happened?A: The quarter turnover wise was tough, our business quarter to quarter should not be considered, it is year to year because some good projects coming one quarter another. Year to year we made the good 51 percent profit after tax (PAT) growth. Regarding this quarter I want to indicate here there was out of court settlement with some oil and gas companies. The outgo was more than Rs 25 crore, we made the payment this quarter. That is why, considering Rs 25 crore is added then our profit is going much more up. We got some approvals, after settling this issue the clients has given new orders and new approvals for future business. So, we settled down the issues.Anuj: For this year you did earnings per share (EPS) of Rs 14.6 what is the outlook for FY17?A: Right now our order positions is approximately Rs 1,400 crore. So, whatever last year our turnover was around Rs 1,400 crore the same order book positions we have right now Rs 1,400 crore. In international, around USD 2 billion we participated worldwide and we are going to get some good chunk in near future. Whatever Rs 1,400 crore order book is there we have to complete before closing of the March 2017. Although the time is very challengeable, but oil transmission lines and gas transmission line worldwide are coming up again and order book is picking up. We hope in this challenged time we hope to do better. Anuj: Looking at your profit and loss (P&L) for fourth quarter you have taken a tax credit of Rs 17 crore. Why is that?A: Because of the minimum alternate tax (MAT) credit as per the new Company Law we have to give all the tax rate available to make the impact on this thing. That is why it is coming in the fourth quarter. The Rs 25 crore whatever the claim we settle down it is also coming in the fourth quarter. Ekta: What is happening with your export orders considering that now oil has recovered? You did mention there is some visibility in your order book, so how has that improved or where does that stand – one and two – you had a tender with GAIL that you had bid for in December 2015, what is the status? A: One GAIL order we are likely to get by tomorrow, which in one segment we are L1 and by tomorrow we will get the new order, GAIL order. Regarding the oil prices has little bit improved worldwide. It is going to make more positive impact although we did well last year also considering the order book position which is comfortable for to complete this year. The additional order considering the bid amount worldwide, we are likely to get more orders which is going to give the positive impact to the company.Ekta: How much is that order worth that you might get tomorrow?A: Tomorrow’s order with GAIL we do not know the quantum. Quantum will be cleared by this evening because final evaluation is in tomorrow’s board meeting so tomorrow you will get it. Some other small orders also we are getting and we will make the announcement after receiving this order. So order book is a comfortable for the company in this challenging conditions.