Analyst Meet / AGM - Analyst Meet
Has an order book of around Rs 4000 crore as on Dec'15
In interaction with Mr. Harshad Hasabnis, Head, Corporate finance on 30th Dec'15.
Key Highlights
The company has an order book of around Rs 4000 crore as on Dec'15. The company is L1 in another Rs 1000 crore kind of orders, primarily from building segment.
The time frame of execution of overall order book has reduced to about 2 years unlike it used to be around 2.5 years in past.
Post these building orders, Power sector will account for about 50% of total order book and rest will be from Roads, Building and other segments.
Almost entire order book is from Government or PSU's and there are hardly any orders from private sector. Almost entire power order book is from NTPC and BHEL Road order book is from NHAI and other organizations. Building including civil contracts is from government and government related bodies.
Power now accounts for about 60% of total sales as compared to about 75% in past couple of years. By FY'17, contribution of non-power will gradually increase to around 50%.
While almost entire order book in power sector is with variable clause and any increase/decrease is a pass through, orders from Road and Building projects are fixed price contracts except steel which is generally a pass through.
Considering the order book and its execution pipeline, management expects continuous margin expansion. Ebidta is expected to improve from around 10% to around 11.5-12% in next couple of years.
Management does not foresee any risk on execution. Unless one is dealing with private sector, where there are lot of uncertainties and delays in clearances and then payments, government orders come to the company only after all clearances and payments generally happen after around 90-100 days from execution.
The company expects to incur capex of less than Rs 30 crore in next 3 years as compared to capex of more than Rs 100 crore in past 3 years.
On Income Tax raid, management indicated that the IT department have completed their IT raid and have disallowed expenditure of around Rs 50 crore for past 6 years and considered them as bogus. The assessment procedure will follow from here on and it will take another 2 years from now post which the demand and payment of tax if any will be apparent.
Going forward, management intends to grow net sales at the rate of 15% for next couple of years with better operating margin and optimum working capital.
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