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Last Updated : May 09, 2016 11:25 AM IST | Source: CNBC-TV18

See 10% growth in FY17 topline; orderbook good: KEC Intl

KEC International delivered a good set of fourth quarter numbers and going forward too, Rajeev Aggarwal, CFO of the company is confident of delivering a 10 percent growth in FY17 topline over FY16.

KEC International delivered a good set of fourth quarter numbers and going forward too, Rajeev Aggarwal, CFO of the company is confident of delivering a 10 percent growth in FY17 topline over FY16.

The engineering firm reported a 26.96 percent increase in net profit to Rs 79.85 crore for the quarter ended March 31. The company had reported a net profit of Rs 62.89 crore in the corresponding period last fiscal.

At the end of FY16, the total order books was around Rs 9450 crore and L1 orders of around Rs 4000 crore, which means an orderbook visibility of around Rs 13000 crore, said Aggarwal in an interview to CNBC-TV18.

Out of the Rs 10,000 crore orderbook, around Rs 2900 crore from Power Grid in FY16, and around Rs 1000 crore from SEBs, said Aggarwal.

On the EBITDA margin front, he expect them to be in the range of 8.5 percent in FY17.

Below is the verbatim transcript of Rajeev Aggarwal’s interview with CNBC-TV18's Latha Venkatesh and Sonia Shenoy.

Latha: Can you begin by telling us about your order book as well. We did see a very good margin uptrend, highest in 19 quarters we understand. So, that is a strong operational performance. But if you can tell us how the order book looks and how will your earnings before interest, taxes, depreciation and amortisation (EBITDA) perform?

A: In fact we have set a very good set of numbers for the quarter and the year as a whole. Our order book as on March 31, stands at Rs 9,450 crore. On top of that order outstanding we have L1 positions of close to about Rs 4,000 crore. So, in all we have clear visibility of Rs 13,500 worth of order book and out of Rs 4,000 crore order book we have already got the confirmed orders in April to the extent of Rs 1,140 crore, that we have already released.

Sonia: We are noticing signs of pick up in government orders, the government capital expenditure (capex) cycle. Can you tell me out of this total order book of almost Rs 10,000 crore how much of it comes from the government and how much from private and within the government as well how much do you get from the state electricity boards (SEBs) from the likes of Power Grid etc?

A: In India we have order book which is coming in from Power Grid, we have seen an uptick in the Power Grid ordering in the last quarter or so. This year we have secured orders for almost Rs 2,400 crore in the last full year plus additionally we have secured another Rs 500 crore plus order from the Power Grid. So, in total last 13 months or so we have received close to Rs 2,900 crore order from Power Grid. Apart from that we are also focussing on SEBs and in the L1 positions we have close to Rs 1,000 crore plus position from the SEBs in Karnataka, in Tamil Nadu and states that we are focussing on.

Sonia: So, have you qualitatively have you see a significant pick up in the government orders and going ahead what kind of visibility do you have from Power Grid and from SEBs?

A: Last one year or so has been really good from the domestic power transmission orders and apart from the India order book we are also getting a huge visibility in the South Asian Association for Regional Cooperation (SAARC) region. So, if we look at the order book coming in from the government SEBs, Power Grid and SAARC region we have more than 65 percent of our order book currently which is from India and SAARC countries.

Latha: Your revenues actually was a bit of disappointment, just one percent higher. One can understand prices are falling for end products. But what will be the revenue run rate for the full year FY17 as well earnings before interest, taxes (EBIT), despite a poor revenue your EBIT did well rising by about 25 percent, what is the call in FY17?

A: From FY15 we have improved our EBITDA margin by almost two percent, which on the year as a whole is close to about 33 percent improvement in the EBITDA number, to Rs 679 crore over Rs 512 crore last year and going forward we believe we should be able to improve it further to about 8.5 percent in FY17.

As far as the topline is concerned as you are aware that because of the soft commodity prices and significant depreciation of the Brazilian currency which is one of our subsidiary that also impacted our revenue. Apart from these two major items there was also a delay in conversion of few large L1 positions into the order that also lead to some set back on the topline issue. But going forward we feel that FY17 we should be able to clock a 10 percent growth in FY16 revenue number.

Sonia: Should we worry about the deterioration in the working capital cycle because a lot of companies are talking about that and your own debtor days have risen quite a bit as well?

A: We have actually towards the end of the year, towards March there has been some slow down in the payment from few customers but significant amount we have been able to recover in the month of April. So, going forward I believe that we should be able to correct this position. As far as the debt level is concerned our acceptances have come down during the year which we have replaced high cost acceptances with the low borrowing cost. So, if you look at our interest cost, it is down by almost 10 percent as a result of that. So, debt increase is not a worry and certainly receivables we have been able to collect. There have been some slowdown in some markets but going forward we should be able to correct that.

Latha: Just once again what did you say is your EBITDA growth expectation for FY17?

A: To about 8.5 percent.

Latha: Not margins, your overall EBITDA? That Rs 673 crore will become what?

A: Rs 673 we are looking for a 10 percent growth in the topline. So, we should be doing close to about Rs 9,500 crore of topline. So, on the 8.5 percent we should be able to post about Rs 750 crore EBITDA or so.


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First Published on May 9, 2016 10:44 am
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