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Last Updated : May 07, 2015 05:18 PM IST | Source: CNBC-TV18

Target FY16 revenue growth at 15-18%: MEP Infrastructure

Jayant Mhaiskar, VC and MD of MEP infrastructure, in an interview to CNBC-TV18, said that their revenue for FY15 is likely to be around Rs 2,000 crore of which only almost 20 percent is received from the Maharasthra government.

MEP infrastructure’s topline has grown from 12 percent to 13 percent while its pending debts continue to remain Rs 2,700 crore after repaying part with its IPO proceeds. The pending debt will be paid gradually over a period of 10 years.

Jayant Mhaiskar, VC and MD of MEP infrastructure, in an interview to CNBC-TV18, said that their revenue for FY15 is likely to be around Rs 2,000 crore of which only almost 20 percent is received from the Maharasthra government.

The revenue is expected to grow further in the range of 15 percent to 18 percent and the reason for this growth, he attributes to operate, maintain and transfer projects (OMTs) and another being a tolling project for one year.

He further adds the company has been awarded a road project connecting Udhampur to Jammu on NH-1B and another by Municipal Corporation Delhi.

Below is the edited transcript of Jayant Mhaiskar’s interview with Reema Tendulkar & Nigel D'Souza on CNBC-TV18.

Nigel: Take us through what the proceeds that you have raised from initial public offering (IPO) will be used for and post repayment of some of you debt what will your debt look like?

A: The Company has raised Rs 324 crore out of which 80 percent would be used towards repayment of debt of subsidiary; balance would be towards general corporate purpose and towards issue charges.

Reema: After you repay part of your debt with 80 percent of the IPO proceeds, what will be the pending debt on the books and what are the Company’s plans to pare it down further?

A: The total debt on books as of March ’15 after repaying of the debt is close to 80 percent of the proceeds would be in the tune of Rs 2,700 crore plus

Reema: Do you have plans to repay this debt amount because it is still quite high?

A: The majority of the debt is through a particular SPV which is the Mumbai entry point project of which it is a long-term debt of almost 10 years plus, so it will be pared down over a period of time as per the original plan.

Nigel: You have heavy dependency on Maharashtra. We know that the Maharashtra government has closed down around four toll plazas. If I am right, you have quite a bit of exposure and one of your toll point in Nagzari is shutdown. Could you tell us how exactly do you plan on combating this kind of a problem?

A: Nagzari is Maharashtra State Road Development Corporation (MSRDC) which was closed down not currently but almost a year back in which the government paid back a small amount of Rs 3.5 crore which was towards the repayment of original upfront payment which was made.

As per government policy of closing down on toll plaza is concerned, to the best of my understanding we do not have any communication neither from the government nor from MSRDC who is our authority.

Having said that if you see the total percentage of our revenue coming out of Maharashtra, is definitely not more than 20 percent of the total revenues in which the car revenues is less than 10 percent.

Reema: As of now since you would be an affected party, there has been no communication about intent from Maharashtra government to shutdown further tolls and even perhaps the entry points into Mumbai?

A: Mumbai entry points to the best of my understanding is a project which has been not included in the list of current toll plazas where cars would be exempted. As a matter of fact the exemption which has been given to the cars is in a way cross subsidised by the government by way of paying an annuity.

So as a concessioner or as a developer, people who have been given or who are likely to affected would be compensated to that tune in terms of revenue on loss or on account of cars which would exempted. However, Mumbai entry points, is a project which is not included in the list as per my understanding.

Nigel: Give us a couple of factors with regards to guidance. For FY16 it is a little difficult to determine your revenue but what exactly is that number we can look at for FY16, maybe FY17 if you are more comfortable with that and any plans of moving into the black because you have been reporting net losses nonstop?

A: I will put that into two parts. One is as far as the revenue numbers are concerned we have a natural growth of almost 12-13 percent YoY on our topline that is predominant on account of two factors, one is the traffic growth which is in the tune of 5-6 percent and second is the tariff growth which is based to the WTI basis.

So we have an inbuilt growth of almost 12013 percent in the current times. Having said that as far as revenue numbers are concerned we will be clocking close to Rs 2,000 crore of revenue in FY15 and we expect that to grow by around 15-18 percent.

As far as turning the balance sheet green is concerned we will be reporting a green balance sheet in March 15 itself.

Reema: So you expect to be profitable by March 2015?

A: Yes.

Reema: Any new projects via which you will be collecting toll in the coming year?

A: Basically NHAI has a long pipeline of products predominantly in the one year and OMT space. Company has been bidding on those projects on a consistent level. We have been announced as H1 in one of the OMTs which is the large OMT which would be adding up our order book of close to Rs 1,000 crore over the next nine year which is the road connecting between Udhampur to Jammu which is a 95 kilometre stretch, national highway NH1B. That is one project where we will be getting the LOA soon.

The second is we have been awarded the Municipal Corporation of Delhi project which we have bidded in a consortium which is an entry point to Delhi which is a three year project which we would be starting in the next 15 days time.

Reema: You indicated that the natural growth rate of the company is 12-13 percent and you could grow by 15-18 percent but you said in FY15 you said your turnover would be close to about Rs 2,000 crore but in FY14 your revenues were only Rs 1,240 crore which means you are expecting a 60 percent jump in your revenues in this year. So how will that come about and secondly if you could also clarify how will the company turn profitable in this quarter because we have data of seven months ending October 14 and at that time you had a loss of close to about Rs 100 crore? So, if you could just clarify on this Rs 2,000 crore revenue and profitability?

A: Revenue for us is split into two parts. One is the one year tolling projects and one is the OMTs. OMTs predominantly we will be capturing the entire full financial year in this year wherein last year we had only six months or nine months of each individual OMT projects. So we have entire one year of OMT projects of which revenue is captured, number one.

Number two, we have been adding projects of one year tolling which is a continuous pipeline which we keep on bidding. Third most important factor we had 18 percent jump on the revenue for the Mumbai project in October 14 on account of the change in toll tariff which is every three years we have an 18 percent hike which is pre-notified by the government way back in 2000.

As far as the balance sheet turning green is concerned there are two important factors, one is the cost of borrowing which will be managed well in terms of bringing it down. Second is revenues have grown up adding to the topline as well as the bottomline.

Third most important factor is we expect a reversal of the Chennai project which is having a negative impact of almost Rs 153 crore on the balance sheet turning into green.

First Published on May 7, 2015 05:18 pm