From the sidelines of IDFC annual investor conference, Sunil Gutte, MD, Sunil Hitech Engineers spoke to CNBC-TV18 about the financial performance of the company and the road ahead.
Gutte is confident of meeting sales target for the current fiscal. However, expansion of bottomline remains a major challenge for the company, he adds.
Below is the verbatim transcript of the interview:
Q: Can you take us through the key highlights of this quarter and are you confident that this kind of performance can be repeated in the next two quarters as well?
A: We had a very good quarter and the margin expansion has definitely come into picture and that is primarily because of operational efficiency, one and in the last corresponding quarter in the corresponding year, there was a prior period tax which is not there in this quarter and definitely with new projects coming up our employee addition has not happened. We have managed with the same number of employee, we have not recruited. So the employee costs has also added to the bottomline. So definitely this margin expansion is our focus and going forward in the next two years our focus is definitely on the bottom line expansion through operational efficiencies or new order book coming up with revised margins and speed of execution.
Q: What about new orders, can you elaborate on what are the new orders you are getting and what kind of margins do they enjoy?
A: With the size of our company, last year standalone we did Rs 1432 crore sales. So the market today stands at for us or companies of our size is good. For growing 15-20 percent, 25-30 percent, growth is not a very big challenge. Since we are into three key sectors we are now into roads and bridges, building construction and primarily into power and now we have added solar also.
So looking at all these sectors, growth achievement what we are targeting is not a very big challenge. The challenge is managing the execution and expansion of bottom line. Bottom line as I rightly told you before also, with the new orders coming in, with the revised margins or the margins with what we used to bid the contracts, now we are bidding with higher margin contracts and we are trying our luck. So the market we are seeming is quite helpful and looking very positive.
Q: Strategically how do you want the company to go forward. Are you evaluating any tie ups, what is the way forward?
A: On the strategy side, now super critical technologies have come up and now engineering, procurement and construction (EPC) jobs have come up. NTPC has taken out few jobs on EPC basis and even the coal mining companies have come up with power plants. Recently I heard Mahanadi coal fields, a subsidiary of CIL has cleared 2x to 800 Megawatts. So, these people I hope are coming up with EPC and why we are trying to catch up with these EPC companies for strategic ties up is because we should not miss out on opportunities coming up at the first level.
So if we are having a strategic tie up definitely the advantage of order will be with us because otherwise small packages if you go, these packages range between Rs 100-200 crore and when you target this EPC, our participation could be in the range of Rs 500-600 crore per package or per power plant. So we want to increase our order book at one location that is why these strategic tie ups are important.
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