TD Power targeting Rs 450 cr worth of revenue in FY17

First half of the fiscal saw a strong order book, says Nikhil Kumar, MD of TD Power Systems.However, expect second half to be better than first half, he added. He further said that the domestic business remained subdued. However, exports are doing better than domestic business, said Kumar.TD Power Systems is targeting Rs 450 cr worth of revenue in FY17, he said.Below is the verbatim transcript of Nikhil Kumar’s interview to Anuj Singhal, Latha Venkatesh & Sonia Shenoy on CNBC-TV18.Latha: What happened that the results were showing such big dips both at topline and EBITDA?A: The topline is the main culprit, we have six months total income at Rs 187 crore versus Rs 247 crore of last year. However, I am quite satisfied with some of the things that we have been doing over the past one year. Last year we had a huge loss coming out of engineering, procurement and construction (EPC) business and the EPC business has now been shut down. We have also seen a very strong order book for the company in the first half of the year - Rs 208 crore versus Rs 169 crore the last year. We have a very strong execution for the second half of the year compared to what we did last year. So, by the end of the year we should deliver much better numbers than we did last year. It has been very tough though in the power equipment market. It has not been easy; it has been a real struggle for us to actually even keep these numbers. It has been a tremendous drop in domestic market especially. We have seen some of the numbers fall off by 60-70 percent on a domestic side. However, what has really been holding us up has been exports and if you look at the order inflow numbers for the first half of this year of Rs 208 crore, Rs 155 crore was from exports and just over Rs 50 crore is from the domestic side and this used to be a Rs 400 crore business for us just three years ago. So, that is the level of challenge that we have faced on the domestic side. The domestic power equipment business is in complete shamble. I don’t expect any recovery to take place in the next six months. Possibly, we might see some traction in 2018, hopefully.Sonia: You had indicated to us earlier that FY17 will be a flat year as far as revenue growth is concerned. Given that this time earnings are weaker than perhaps what one would have expected would you want to scale down that guidance?A: The topline is going to be approximately flat, I am still holding on to that. So, we were about Rs 450 crore last year and we will be around Rs 450 crore this year. So, I am not going back because we have seen clear visibility, we are already in November, we are seeing the visibility for the next four months until March. Therefore, I am not going back on that earlier guidance that I had given. I am also seeing that our EBITDA numbers will be the same as last years. I am also pretty confident that our total order inflows will be much better than last year. So, we see better visibility for our business for the next year but it is very important to note that almost all our growth is coming from exports and we are seeing unbelievable declines taking place on the domestic side. Anuj: The big bet for the market was that once your EPC business is done away with the margin profile will improve by what 2-3 percentages. Do you see that happening from say FY18 onwards?A: Yes, you will see that in this year itself. On a consolidated basis we had about Rs 20 crore losses coming out of the EPC business last year. However, the standalone business of TD Power and manufacturing business of large generators, will deliver a bit of profitability as we delivered last year. So, yes, in short, much better numbers this year compared to last year. However, revenues has been very lumpy, we have seen, for example the first half has been slow. We think Q3 is also seeing a very muted off take. We are seeing a huge bunching now happening in Q4 almost something like 40 percent of our revenues coming in Q4. This is the way the market is right now. As I said it has been a struggle, it used to be a struggle, but we are fighting and we are going to deliver the numbers as we committed.