Key takeaways of the call

The company is No1 or No 2 in most business lines where it present. The company has market leadership in hydraulic & mechanical presses; sugar plants, CFB boilers, Oil & Gas boilers, Slop fired Boilers, traveling grate boilers, bubbling bed boilers, Process equipment, liquefiable gas containers as well as made to order large steel castings.

Standalone order inflow for Q3FY20 and 9mFY20 was Rs 639 crore and Rs 2200 crore respectively. Order backlog as end of De 2019 stood at Rs 6200 crore (down from Rs 8400 crore as end of Dec 2018) of which about Rs 5300 crore was project orders and Rs 900 crore was product orders.

Order inflow at subsidiary level was Rs 200 crore for 9mFY20 and backlog is about Rs 500 crore as end of Dec 2019.

Next year execution is not a problem considering healthy order backlog. The company despite relative lower order book expect to have positive revenue growth in its top line for FY21.

The company is hopeful of bagging orders worth Rs 4000-5000 crore in projects and Rs 1000 crore for products/manufacturing. The company expects an order inflow of Rs 300 crore for subsidiary.

Enquiries are good but there is delay in finalisation of orders. Currently lot of orders are close to finalisation and expect finalisation of them in next few months.

Expect the margin of manufacturing to get back to usual around 10-10.5% from Q1FY21 onwards. The profitability is hit largely due to castings which has not grown.

The sugar subsidiary is planning to set up an ethanol plant. The planned capex of it is about Rs 180 crore.

Cavite Biofuels Producers (CBPI) of Philippines- In terms of settlement of arbitration agreement arrived with CBPI, the company's WOS at Singapore has acquired CBPI with related assets and liabilities on Oct 2019 for a token consideration of USD 100 million. The outstanding in the books of the company is about Rs 242 crore and this figure not includes any interest. The company looks to recover something more than Rs 242 crore by selling CBPI. If it has to run it on its own the company has to make further investment of about USD 15-17 million.

YTD legal cost is very high at about Rs 44 crore and that is because of CBPI litigation. Here onwards it will not be there. In Q3FY20 the litigation fee stood at about Rs 5 crore.

The company will build its own building next fiscal on the land it has bought some years back in Noida to house all the offices operating out of rental premises.

In boilers the company have presence in 40-400 tonne boilers with feed stocks of coal, O&G, biomass, waste heat recovery etc. The company has 50% market share in this segment. The boiler demand is steady with good demand for waste heat recovery boilers and slop fired boilers (from Refinery) in the last few years. It has grown in last 2 years in India.

FGD order book of the company is currently stands at Rs 1100 crore. The orders are expected to get completed only by early FY22.

The company is not inclined to do desperate bid to win orders.The company has entered new verticals of Material Handling, air pollution control and railway factory construction in last few years and adopted entry pricing. And it has learned things in these new verticals.

Sugar sector investments has slowed down and signs are not looking promising at the momentum. So the company looks exports for growth of this business verticals.