See 10% rev growth, 8.5-9% EBITDA margins for FY14: NCC

YD Murthy, Executive VP-Finance, NCC is confident of  achieving a 10 percent revenue growth for FY14 and topline of Rs 1700-1800 crore in Q3,Q4, on back of substantial orders of about Rs 3700 crore received in Q2.

"We are confident we will be able to generate EBITDA margins of 8.5-9% for FY14,” says Murthy in an interview to CNBC-TV18. According to him the company will be able to pare down the debt to the tune of Rs 200-250 crore by monetising some build operate transfer (BOT) and real estate assets. Also read: Parsvnath to build township at Gurgaon-Sohna rd Below is the verbatim transcript of his interview on CNBC-TV18 Q: Just take us through things that are troubling your company at this point in time, it clearly looks like margins are down, cost must be high and execution also has not been as good as investors expected, what were the highlights of the Q2 numbers? A: We have done a top line of Rs 1370 crore in Q2, it is more or less flat compared to Q2 of last year. There is a dip in the profits; we have reported a net profit of only Rs 5 crore for Q2 and for the first six months of the current year the top line was about Rs 2800 crore and the net profit is about Rs 15 crore. The dip in the profit margins mainly because of high interest cost, and the macro environment with high inflation and high raw material costs. The highlight of the quarter is we have bagged fresh orders of about Rs 3700 crore with reasonably good margins. The order accretion for the first six months of the current year now stands at about Rs 4700 crore which is slightly higher than what we anticipated. This gives us comfort as we go forward, more orders can be expected and the order book also has improved from Rs 18,500 crore at the beginning of the year to about Rs 20,200 crore at the end of the first half. Q: You pointed out that high interest costs are completely eroding your profitability, in this quarter as well your EBITA stands at Rs 100 crore and your interest cost is at about Rs 107 crore or so. Can you give us any indication of how much you plan to reduce your debt by the end of FY14? There was a marginal reduction this time around but by the end of FY14 where will the debt stand at and how much will the interest cost run rate reduce? A: The biggest problem is the high interest burden that we are carrying and the management is looking at taking up some measures to see that the debt burden is reduced. One is by monetising some of our build operate transfer (BOT) and real estate assets. We are confident that we will be able to generate nearly Rs 200-250 crore of funds before the end of the current year and if that materialises that much of debt reduction can be expected. Q: Which are the projects you are planning to sell and what progress should we expect in this quarter? A: We are looking at sale of some real estate assets particularly our subsidiary NCC urban is planning sell some of the land parcels. On the BOT side also, we are looking at monetising one or two road assets but the talks are at a very preliminary stage. May be it will take a while when concrete results are expected. Q: You had outlined that you expected to do 10-15% revenue growth in FY14, would that be difficult on back of sluggish first half? A: We can still achieve 10% topline growth but definitely not 15%. One must remember that usually in Q2 because of monsoon, the project works get affected and turnover is less. However, we are confident of generating a topline of Rs 1,700-1800 crore in Q3 and Q4 because we have got substantial orders in Q2 and execution will take place in Q3 and Q4. Q: Will margins too improve? A: Yes, we are confident we will be able to generate EBITDA margins of 8.5-9% for FY14.