Texmaco Rail delivered posted a decent set of fourth-quarter numbers last week despite management claiming fiscal year 2014-15 was a ‘tough’ year with hardly few orders coming in.
Going forward, the company expects performance to pick up significantly in FY16, executive director AK Vijay told CNBC-TV18’s Sonia Shenoy and Reema Tendulkar in an interview.
Texmaco’s fourth quarter revenues surged 58 percent year-on-year to Rs 144.5 crore while net profit was up 277 percent to Rs 13.2 crore, fuelled partly by a 127 percent jump in other income (Rs 10.2 crore vs Rs 4.5 crore).
Vijay told CNBC-TV18 said that while in the fourth quarter, both its steel castings and railway divisions were impacted, going forward, the company had received robust orders for each.
Texmaco’s overall order book stands at about Rs 1,200 crore currently, he said.
Beliw is the transcript of the interview on CNBC-TV18.
Reema: Overall FY15 seem like a fairly challenging year for you all. Your revenues were down nearly about 2 percent odd but in the January to March quarter you have seen substantial pickup in your turnover, it has gone up by more than 50 percent. What lead to this performance in the quarter gone by and is it sustainable?
A: The year 2015 was a challenge for the company and as the company primarily deals in rail products, basically the company is the largest wagon manufacturer in the country today. However, the situation was because the railway orders not coming in time and when the orders were coming, the prices were too challenging and even if orders came then the supply or free supply material – you might not be aware that railways do supply a lot of material free, for manufacturing wagons.
Therefore, until and unless the material is received by the company, the company cannot produce those goods resulting thing was that our performance in spite of best efforts was much lower than what we would have anticipated about.
The situation was that the turnover hardly rouse, it rouse by just 8 percent to 559 as against last year of 515. We were expecting much better performance than this but due to unfortunate situation that in spite of poor orders the free supply material would have been available to us.
As a result the profitability was also impacted, prices were challenging but compared to the entire ground reality and situation the company has been able to perform reasonably well whereby if you see the PBDT, we have been able to achieve slightly better than what we achieved last year and that shows confidence in the company is working about that even in challenging situation the company is able to come out with flying colours.
Apart from this the company works in other segments like hydro mechanical, steel casting. However, steel casting also suffered in tandem with business of railway wagon division or rolling stock division but hydro mechanical division has shown improved performance this year resulting that we are able to generate much larger profit from that division which is offsetting the losses which were incurring otherwise in other divisions. So it’s compensating thing etc.
Recently we started our bridge division; the bridges & structural division which we started last year and we are glad to share that we have booked in order for one hundred crore for exports in the first year itself and now we are negotiating other large value orders for exports in domestic market as well and this division will keep us in good stead especially in respect of dedicated freight corridor (DFC) which is now getting the impetus from government and government want to bring it much faster.
Sonia: What is your total order book as of the month of March and which are the segments where you are getting the chunkiest orders from?
A: We are getting good orders from private sector in the rail wagon division, which is the main division of the company. We are also getting good orders for our steel casting business but as far as railway business is concerned – that is very challenging and the recent tender, which the railway has come out was substantially reduce quantity as against the budgeted quantity of 16,800 numbers.
The railway finally came out with a tender which was only 8,500. So it was half the quantity which the railway required. As a result what happened, all the bidders had cutthroat competition and the prices surprisingly has gone down again this time.
Although the fact remains that the last year’s prices were unremunerative and non-workable and still the prices have come down, so this is becoming challenging but fortunately private sector is looking up and we have a larger order from export, so we are able to sustain our division and for this year we expect to do much better than what we did last year.
Sonia: What is the order book currently?
A: The order book currently on the wagon front is more than about 2,000 numbers which in value term will translate into about Rs 600 crore then we have the order book in respect of hydro mechanical which is running more than Rs 400 crore. All together in the Texmaco Rail we have an order book of more than Rs 1,200 crore.
Reema: These railway tenders at Rs 8,500 crore, which is nearly half of the budgeted amount, was this FY15 or is this what is happening in the FY16 budget?
A: The railway tender which came out was for ’15-16 whereas for ’14-15 they have not placed any orders. There were no order for whole year but since ’13-14 tender was finalised only in April ’14, so we had some quantity to deliver in ’14-15 and that is what has been delivered to railways during last year.
Reema: Even for this year it is half of what the budgeted amount is?
A: The Budget was Rs 16,800 crore which was announced in the Parliament and was approved also but the tender quantity was Rs 8500 crore.
Reema: You said in FY15 your revenue growth was lower than what the company was anticipating. Can you tell us what you are expecting from FY16 per se considering that railways are looking challenging but exports are picking up. What is the kind of growth that you are expecting for this year?
A: In fact we do not expect much of business will to come from railway and this year our railway business may plummet to all time low. So basically the business will be coming from other segment which is as explained from the other divisions like steel casting, private wagon division, hydro mechanical, bridge and structural and railway will be substantially lower.
Sonia: In your heavy engineering business for this quarter gone by you saw very good growth. Your revenue was around Rs 130 crore or so in heavy engineering. What kind of growth would you expect to see in FY16?
A: Based on my order book today and the enquiries which are there in the offing which are going to come to us and which are in the pipeline, we expect that this year we will be able to do at least 30-40 percent plus than what we did last year.
Reema: In this total order book of Rs 1,200 crore, what would be the contribution of exports?
A: The export quantity is almost Rs 200 crore plus.
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