Key takeaways of the call

Order backlog at the beginning of April 1, 2016 was Rs 1250 crore and of which about 79% domestic PSU/Government/government funded orders, 2% private domestic orders and 19% are overseas orders funded by multilateral agencies.

The company bagged one order worth Rs 32 crore in May 2016. In addition the company is L1 in orders worth Rs 250 crore. Target an order intake of over Rs 1000 crore in current fiscal.

H1FY16 was relatively lean interms of enquiries and bids. Situation though improved in H2FY16 with the company well placed in several bids, only four orders including one from overseas got placed and the release of more orders is spilling to the first quarter of FY17. Overall bids worth Rs 5000 crore in both domestic and overseas markets are pending. The company is confident of a decent flow of fresh orders in FY2017.

The company expects 20-25% growth in sales for FY17. The company is confident of maintaining FY16 EBITDA margin in FY17 as well.

Continue to struggle with cash flow issues. Formal closure of jobs that are virtually completed are getting deferred largely in orders from power and industrial sector. So the company could not collect the retention money back. Pressure on cash flow has been compounded by peculiar payment terms in some of electrification orders which is resulting in increase of inventory. These two problems is anticipated to be resolved in the current fiscal.

Of the total receivables of Rs 302 crore, receivables more than 6 months are Rs 123 crore and balance are less than 6 months. Of the Rs 123 crore of receivables about 85-90% is retention money. The company has not classified outstanding of Rs 6 crore from Lanco Infratech which is quite old as bad debt as its hopeful of collecting it.

The company's traditional power and industrial sectors is not expected to see early revival and the main opportunities in the next year or two will come from domestic water sector which is poised for a huge impetus on account of urban renewal and river cleaning oriented action plan. Similarly the power distribution and rural electrification sectors, including substations will also continue to provide ample opportunities.

In overseas market the company continue to vigorously pursue opportunities in all sectors in sub Saharan Africa and in nearby SAARC countries, with particular focus on funded projects. Of the pending bids worth Rs 5000 crore about Rs 2500 crore is from Africa.

The company has 3 large rural electrification projects in Bihar, which are funded by REC. However on completion of electrification, the project taken over by client is taking time. This makes the execution cycle longer leading to cash flow issue. Though the company has raised bills for the job executed, that is not paid on account of this reason.

Long term borrowing is Rs 5.5 crore and short term debt is Rs 87 crore. Cash on hand is Rs 51 crore.

In terms of vertical about 63% is electrical projects, water 28%, industrial 2%, oil 3% and power sector 4%. Out of total FY16 sales about 20% is from overseas.

Liberia Project - With the country declared Ebolo free the company has remobilized and work there is now in full swing. The company is has started billing regularly.

Margin improvement is a function of the company improving its project execution efficiency in verticals such as rural electrification, selective bidding with decent margins. The company is now executing fewer projects of higher size with the same human resource rather than lot of smaller projects.