Arjun Gupta: Whole-time Director of the company addressed the call:

Highlights of the call:

December 2017 quarter sales grew 16% to Rs 107.85 PAT grew 48% to Rs 3.18 crore.

The operational results for the first half of the year were adversely impacted due to introduction
of GST, paucity of working capital and delay in payments from customers.

From the third quarter onwards the adverse impact due to GST whilst not fully extinguished, have substantially been overcome and this is reflected in the increase in turnover, which while still slightly lower than expected.

For the nine months sales fell 5% to Rs 267.985 PAT was down 2% to Rs 7.23 crore.

Sales for FY 2018 are expected to be more than that of FY 2017.

The company has an extremely healthy order backlog of close to Rs 2200 crore to be executed in next three years. This provides an excellent foundation for good growth in the next 2-3 years and beyond. 

The company has large outstanding bids worth over Rs 3000 crore and a known L1 position of around Rs 150 crore.

The order back-log is largely contributed to by the water and Electrical sectors with other traditional sectors now having a negligible contribution.

The company continues to look for more orders, both domestically and overseas, at decent margins.

Apart from the Electrical and Water sectors there may be some opportunities in the Power & Industrial sectors especially related to Air Pollution Control Systems and Waste-to-Energy Plants as new measures are being implemented by the Government to contain the menace of Air Pollution and Solid Waste.

The tightness in working capital, mainly due to delay in payments, has compelled the company to increase short term borrowings with resultant increase in finance cost. The company has approached banks to increase the limits and have been successful in doing so.

To be able to take full advantage of its healthy order backlog, the company is actively looking for ways and means to augment access to additional funds, for overall enhancement of operational performance in terms of turnover and profit.

The prospects both medium and long term are good.

For FY 2018 the company expects the EBIDTA margins to be maintained around or over 12%.

Major chunk of receivables are from Bihar and Rajasthan. Bihar Receivables was expected since last 2 months but there were some billing, conversion and acceptance issues. The Management has been personally visiting the sites so bills are converted into receivables and money has started to come. It has started in the current month. Before March Rs 30-40 crore of receivable is expected to come in from the total Rs 90 crore from 4 projects.

In Rajasthan the company has comfort given from the water department/minister. The government wants water in 55 villages in Jawai and so this has put pressure on government to release funds.

Total Receivables from Bihar and Rajasthan combined is over Rs 130-140 crore. The money has started coming from the current quarter.

To execute the order book the company does not have any need for capex. The company would need funds for WC for which it has requested and been granted some funds from banks.

The company is looking raising capital through equity also But this will be taken only after FY 2018 results as investors will be looking at FY 2018 results before investing.

Like last year there could be some write offs in Q4 of this year too. Can't comment right now how much would the figure be.

Short term debt is Rs 120 crore and long term debt is Rs 3 crore.

Cash position has halved from a year ago and order intake has doubled. Thus the company needs buffer of cash to service the orders. And thus it will dilute equity to raise funds.

The company would maintain EBITDA of 12%+ on a very conservative basis.

Receivables from Reliance is Rs 6 crore and same should be from IndiaBulls.

Out of Rs 2200 crore order there is delay in around 20% and the rest is ready for execution.

But for the GST problem, the company should have done much higher turnover. With the impact of GST vanishing, Q3 has been good and Q4 is also running good. The momentum should sustain.

In last 2-3 months the raw material prices have increased substantially but the company has managed to give revised prices contracts to its customers.

The management has pledged shares to get more limit from the banks which it has succeeded in getting.