In an interview to CNBC-TV18, AK Lakhotia, CMD of MBL Infrastructures spoke about the June quarter earnings and his outlook for the company.
He said, "We have an EPC contract worth about Rs 7,500 crore and eight BOT projects."
Lakhotia further said that he expected a growth of 20-25 percent in engineering, procurement and construction (EPC) revenue.Below is the verbatim transcript of AK Lakhotia’s interview to Latha Venkatesh, Sonia Shenoy and Anuj Singhal.
Latha: Can you tell us what kind of visibility you have, both in terms of engineering, procurement and construction (EPC) revenues and build, operate, transfer (BOT) revenues for the rest of the year because you have done extremely well in BOT revenues. Should we expect this to be the run-rate for the remaining three quarters?
A: Currently, we have an EPC contract worth about Rs 7,500 crore and eight BOT projects. We should see a lot of BOT projects getting operational; particularly Bikaner-Suratgarh is getting operational by November and another project by March and so on and so forth. So, we should see a good visibility in terms of BOT revenue. On the EPC side, we should see a growth of 25-35 percent.
Latha: In the existing BOT projects, what is the rate of growth of revenues?
A: In the existing, it is about 10 percent, but more growth will come from the newly operated BOT projects.
Anuj: The big issue for the company is the large pledge of promoter share holding. 70 percent of promoter shareholding is pledged. Has there been any fresh development on that because your stock was quite volatile because of that.
A: Yes, the stock was quite volatile and we have learned a bitter lesson. Within this financial year, we will have all the shares de-pledged and we will restrain from pledging going forward.
Anuj: My question is that the share that you have pledged, have some of them been sold in open market? Have you heard anything on that because it looked like a bit of a liquidity issue when the stock crashed about two weeks back?
A: On the fall of the prices there was a margin call and that led to the volatility and once that has been clarified, there is no volatility on the stock.
Anuj: Can you give me the exact number in terms of the margin call because 67 percent of the promoter shareholding is pledged. If you could give me the exact number and by when do you plan to revoke the pledges?
A: These pledges will be revoked immediately and 9 percent of the promoter’s pledging was invoked. We hope the issues have all been settled with everybody. We hope the revocation should take place shortly.
Anuj: Have you intimated to the stock exchanges that 9 percent of your pledge was invoked?
A: Yes, we have intimated.
Anuj: By what means do you plan to revoke the pledge in terms of money? You have significant money arranged for that?
A: Yes, we have significant money arranged for that and shortly, we should be able to announce that they have all been revoked.
Latha: The entire 83 percent will be revoked you think?
A: The invocation was for 9 percent only and de-pledging will happen for the entire stake.
Latha: The de-pledging for the entire thing, when do you expect that to get done?
A: Within this fiscal year.
Anuj: As you said, you have learned a bitter lesson, so will you say that going forward, you will not be pledging shares?
A: Yes, that is what we intend to do so.
Sonia: Your margins have been declining quite a bit as well. What is the expectation going forward from that 11 percent margin level that you have clocked in?
A: Going forward, we should see the northward journey. Already, we are seeing the northward journey from quarter-on-quarter basis and we should be expecting the margins of 11-14 percent earnings before interest, taxes, depreciation and amortisation (EBITDA) and profit after tax (PAT) of 4-5 percent going forward.
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