Key takeaways of the conference call

Standalone sales for the quarter were higher by 17% to Rs 109.91 crore. Majority of the revenue for the quarter came from power and water with a share of 37% and 34% respectively. The balance is accounted by O&G (16%), industrial (10%) and others. But with operating margin contracting by 110 bps to 11.6% the growth at operating profit restricted to 7% to Rs 12.79 crore. On the back of lower other income and higher interest cost, the PAT was lower by 5% to Rs 7.21 crore.

Current order backlog is Rs 1100 crore. Order intake so far in current fiscal is Rs 350 crore and the company is well poised to achieve an order booking of Rs 950-1000 crore for current fiscal.

The company has placed bids for orders worth Rs 650 crore. Going forward the company sees traction in water and rural electrification work. The company expects orders from both international as well as domestic market.

Of the current order backlog, the share of thermal power is 30%, water 29%, industrial 13%, O&G 9%, electrical distribution 19%, nuclear power is 2%. Share of foreign orders is little over 50% in order backlog.

EBITDA margin pressure is largely on account of the company booked revenue on cost only on material supply in case of Mozambique order as the payment is based on milestone crossing and not on supplies. So the company carried large WIP in its balance sheet. Moreover in general with fewer jobs in the market the margins tend to be low in case of new orders.

Expects 20% growth in top-line for FY13, but bottom-line will improve just marginally over last year.

Bangladesh orders are yet to move given land related issue faced by the developer. There is no funding related issue on the project it is more of land only.

Receivables are majorly of retention money. No outstanding more than 6 months except that of Lanco orders. No major outstanding except Rs 1.5 crore (of recent billing) in case of Reliance Industries. Doosan is about Rs 3 crore, Outstanding on Lanco contract is Rs 5.5 crore and of which Rs 4 crore is more than six months.

One of the projects for which IPO raised is setting up of facility for maintenance and storage of construction equipment. The company is not able to find out suitable land required which is about 5 acres. Since Arihant is winding up, the company bought it and converted it into its wholly owned subsidiary to service construction fleet.

Even in Mozambique order the outstanding is only about Rs 5 crore not big enough to hit bottom-line but only put pressure on margin.

The focus of the company is making profit on each of its orders and it is not after turnover. The company will be bit cautious in case of private customers.

Orders that are in hand are moving well except that of Lanco. Even in case of Lanco project the project is moving but not at the pace at which the company expected it to move.