Indian railways plan to float tenders for electrification of around 7000 kilometers of rail lines. This tender opens up new opportunities for electrical Engineering Procurement and Construction (EPC) companies, something that managements have been vocal about in the last 2-3 quarters.
Throwing more light on the above development and the business outlook going forward, Manish Mohnot, MD, Kalpataru Power said they expect the above tenders to come out in the month of December or before January-end.
Typically, the share of electrification project has been in the range of 15-20 percent in the last couple of years, said Mohnot adding that today the order book of railways is around Rs 1000 crore, which is expected to go in excess of Rs 2000 crore in the next six months or so.
The margins in electrification business are similar to the other contracting business, which is around 10-11 percent, although they vary a bit from project to project, he said.
With regards to Shubham Logistics, he said the revival plans are on track although on other hand they continue to look at strategic partners. The business has done well in the current year and has turned EBITDA positive and will breakeven by year-end, he added. It could be any kind of options but not looking at an IPO for it, he confirmed.
He is confident of achieving revenues growth of 15 percent in FY18 as earlier guided by them given the orderbook visibility in excess of Rs 10,000 crore. In the first half the revenues were around 4-5 percent but expect to do 23-25% in the second half, he said.
Talking about the sale of Wainganga project back to NHAI, he said NHAI has floated some tenders for expanding to expand from four-lane to six-lane, so the company at present is looking at option of either to bid for the project or exit. The bids are due in December last-week or January first-week, so the company will decide before that, he said.
In terms of orderbook, currently 55 percent is exports and 45 percent is domestic but the revenue share is 50-50 percent, said Mohnot.
The big growth driver for their business is railways, oil and gas pipeline and advance machine international business but domestic transmission and distribution (T&D) is a bit sluggish and won’t be a growth driver for at least few years.