Key takeaways of conference call

Order book as end of June 2013 was Rs 705 crore with the share of EPC business being Rs 357.4 crore, manufacturing Rs 282.6 crore and balance Rs 66 crore accounted by projects business. Of the total order book about 14% is exports.

Order inflow in Q1FY14 was about Rs 147 crore with manufacturing order intake stand at Rs 91 crore and that of project at Rs 56 crore. In July'13 the company has bagged an EPC order for setting up a 27MW Waste Heat Recovery Captive Power Plant and with this EPC order, the order book further expanded to Rs 840 crore, which is more than double of till date last fiscal.

On the manufacturing side, order inflows in Q1 included 37% export orders compared to 30% in Q1 last year. The entire EPC order book is domestic and 1% of project business order book is exports.

Given accelerated execution momentum for orders on hand, revenues and profitability will expand significantly in the second half of this fiscal year. Based on current business visibility, the company sees strong revival in manufacturing revenues in H2FY14. Expects the manufacturing revenue of Rs 400 crore for FY14 with H1FY14 account about Rs 100-150 crore and balance Rs 250 crore of revenue coming in H2FY14. This is based on delivery schedule of orders on hand. Revenues from projects business will be significantly lower this year due to weak order booking last year caused by a strong yen. EPC revenues for FY14 will be in the range of last fiscal with majority of it coming in H2FY14.

Domestic market pricing is very constant in case of manufacturing business. On exports orders, the company will gain on account of rupee depreciation. So overall manufacturing will deliver a margin in line with the company's past record. Confident of sustaining that level. All recent EPC orders were taken on competitive range. Hope will be in the past margin range. On back to back orders with suppliers, the company is negotiating competitively with the company's suppliers, so the margin will be maintained.

Since the company started undertaking full EPC implementation for power projects, the order momentum in this space has increased considerably. The current demand environment is moving towards smaller CPPs and waste heat recovery, where it has built strong presence and is seeing better business visibility.

Grim and few job on the market but the company is still well placed as it is one of the companies that does not have financial stress and confident of booking few more EPC orders in the next 24 months.

Market though competitive and fluidic the company is strongly focused on export market in areas such as steam turbines, gas engines and hydro, where the players with whom the company is working with are giving strong positive outlook for next year.

The new facility for manufacturing 2-pole AC generators upto 200 MW based on Siemens technology will be commissioned by the end of 2013, as per original plan. Capex of Rs 120 crore will be incurred in FY14, mostly towards this expansion, partly utilizing the cash balance of Rs 304 crore. This includes Rs 51 crore of IPO funds which will be utilized by end of year. The company will remain debt free and cash surplus post implementation of the expansion.

In a continually weak demand environment Q1FY14 revenue fell by 46% and the PAT was down by 64%. Of the total revenue for the quarter the share of manufacturing was Rs 58 crore, the project 7 crore and EPC 8 crore as result of this the share of mfg revenue increased. This was the fallout of weak order booking in Q2 and Q3 last fiscal year.

The company addresses export market especially developed markets through OEMs as well as direct sales with its own sales offices. Hydro is still strong for it with strong demand/enquiry from Canada and Scandinavian countries. Gas Engine business and Steam turbine business are sold worldwide with its association with Siemens, own subsidiaries etc.

Of the 8 EPC order referred by the company in the earlier call, about 2-3 have finalized and the company has got one of it. The company is well placed in few of them and not well place in others. None of this is more than 50 MW each in size.

Of the other income about Rs 10 crore is forex gain both translation and mtm and balance are largely on interest from deposits.