Pratibha Inds eyes Rs 230-300cr from non-core asset sale

In an interview to CNBC-TV18’s Sumaira Abidi and Ekta Batra, Yogen Lal, CEO, Pratibha Industries spoke about the company’s Q1 performance and the road ahead. Below is a verbatim transcript of the interview Sumaira: You have seen a very big surge in revenues this time around, almost touching that Rs 700 crore mark. What are the key or your high value projects which are actually contributing to this big surge in your topline and how much do you hope to achieve in FY15?A: We were sitting on a very strong order book and we were pretty confident that this order book would convert itself into revenues in this fiscal. The first quarter is just a manifestation of that.Apart from our Delhi metro projects which we are doing, there are projects in Rajasthan and in Gujarat in water supply and the sewage segment which have contributed to this jump in turnover. We do expect that this trend will continue in the rest of this fiscal as well. Ekta: The big highlight this quarter for me was the bottomline turnaround; Rs 11 crore versus Rs 20 lakh on a year-on-year (YoY) basis. How sustainable is this turnaround on the bottomline, what can we expect at least in this quarter and maybe even what you are working in terms of internal targets for a couple of quarters?A: As far as the bottomline is concerned our main focus remains EBITDA first which we have by and large been able to keep at stable levels. In terms of PAT, we were rather adversely impacted in the previous year because of forex loss. This fiscal, the dollar remaining at around 60 levels there has been no gain neither any loss from this forex activity and therefore the PAT going forward I am hopeful that we will be able to consolidate PAT. As we deliver better revenues over the coming quarters the interest cost as a percentage of the revenue will further drop and then that should entail better margins for the company at a bottomline level.Sumaira: One of the key concerns does remain that your contracts are very high working capital intensive. So, that remains one of the key concerns. Are you looking at perhaps refinancing some of these loans, what is the plan on that front?A: We are not looking at refinancing these loans because all our contracts are Engineering, Procurement and. Construction (EPC) contracts and none of them are build-operate-transfer (BOT) where we have any revenue from toll. So, refinance to that extent is ruled out. However, definitely better revenue recognition and higher growth in turnover will help alleviate the debt issues that you just mentioned of the company. Ekta: Rs 1800 crore was the last debt figure that we had and you also had QIP plans so the markets are looking quite robust, would it be a good time to tap it?A: We have already taken board approval for raising funds through the QIP route. We are evaluating all options. As of now we have not frozen any plans. Looking forward, we expect that this year will be a very good year for infrastructure given the fillip smart cities, Delhi-Mumbai Industrial Corridor, freight corridor. Ekta: Any stake sale plans of your non core assets?A: We are looking at exiting a few assets that we hold. However, we are not seeing the appropriate valuations come in as yet. We are hoping for better days and we expect that we should be able to fetch at least Rs 250-300 crore out of that exercise. Sumaira: You said that the bulk of your orders are from the water sector. Can you tell us what margins you enjoy on these orders and also what is your consolidated order book at present?A: The order book after the first quarter would be somewhere at around Rs 8,300 crore. We do expect that the water segment is around 40 percent of this order book and our margins in this segment at the EBITDA level are at around 15 percent or so.