Throwing more light on its fourth quarter performance and the way forward, Parag Shah, Managing Director, Man Infraconstruction said the projects in the pipeline will start booking revenues from the second and third quarter of FY17. The company currently has Rs 150 crore cash on books.
FY17 will be better than FY16, he said.
The profits in Q4 of the last fiscal year were actually higher at Rs 7 crore but we had to pay the pending CSR (corporate social responsibility) donation of Rs 2 crore and make provisions for Rs 4 crore, said Shah. However, there are no pending bad debts on the book now, he said.The consolidated year-on-year FY16 revenues stood at Rs 277 crore versus Rs 275 crore. YoY EBITDA came in at Rs 36 crore versus Rs 25 crore and margins were at 15.9 percent as against 9 percent.
Below is the verbatim transcript of Parag Shah’s interview with CNBC-TV18's Reema Tendulkar.
Q: It has been a bit of a lacklustre quarter for you while your topline has grown, your profits have come in lower at Rs 1 crore versus Rs 3 crore. Could you take us through how the quarter was, what were the key highlights and what your outlook is going forward?
A: Basically the last quarter profit was higher but in the last quarter we did the corporate social responsibility (CSR) donation which was pending of last to last year also which was amounting to around Rs 2 crore. Plus there was a special provision that has been provided of return of Rs 4 crore in last quarter. So, basically last quarter's profit was actually Rs 7 crore, but there is a provision of Rs 4 crore and Rs 2 crore is CSR. That is why that amount is coming to Rs 1 crore.
Q: So, CSR is Rs 2 crore and provisioning is Rs 4 crore. What is the provision regarding?
A: Provision of bad debt recovery. However, we believe it is recoverable but as per the auditors we have to provide provision, so we did the provisioning in the books.
Q: What is the total size of your bad debts as of now?
A: No bad debts pending in the books.
Q: So, whatever it could potentially be at risk, you have provided for it?
A: Yes, we always provide in every quarter.
Q: If I look at your finance cost it has gone up on a quarter-on-quarter (QoQ) basis. What would be the reason for that?
A: Finance cost -- interest has been given to a partner in subsidy companies; it is not outflow to other banks and all. In a real estate model we have a subsidy company where the partners and we always invest the money and we all get interest on that but that interest has gone to the partners, which comes into the consolidated books. So, there is no actual finance cost.
Q: So, it is not something that you are paying to the banks?
A: No.
Q: Could you explain a little more about your intercompany dealings?
A: Basically we have about five-six subsidy companies. In a subsidy company, we and our partners, whichever the partners are there we all invest the money and we take 12 percent interest on our capital. Now in a consolidation Man Infraconstruction's amount gets knocked off but the partner's amount comes into balance sheet as per the accounting standards.
Q: But it should reflect in your consolidated books, right?
A: Yes.
Q: But your consolidated financial cost has gone up on a QoQ basis but be that as it may your margins are flat on a YoY basis despite an improvement in your revenues what is the outlook on revenues and margins in FY17?
A: FY17 we can't give position for next year but our projects, whichever were there in the pipeline, all the projects have started and we believe from the second quarter or third quarter from this year the revenue will start coming. We are still sitting on a liquidity of more than Rs 150 crore in the books.
Q: What are you planning to do with the cash of Rs 150 crore. Are you buying some more land or will you require it as working capital?
A: Part amount, we may buy some new land but the part amount we will keep it for liquidity because there is a loan in consolidation books like in Atmosphere project there is a bank loan. So, we keep equivalent amount in books also to maintain our project.
Q: What is the current bank loan?
A: Current bank in Atmosphere is totally Rs 400 crore.
Q: That is on consolidated basis?
A: On a consolidated basis Rs 400 crore where we are 17 percent stakeholder. So, in our books it comes to around Rs 68 crore but against that we are sitting on a liquidity of Rs 170 crore. So, we keep Rs 50 crore always as working capital.
Q: Any update or progress on your real estate project whether it is at Ghatkopar, any projects hitting revenue recognition in Q1. What is Q1 going to look like?
A: This whole year will look much better than the last year. That is what I can say.
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