• Operating income was up by 5% to Rs 3841.17 crore driven largely by strong growth in revenue of non T&D business of railways, civil & solar as well as cables. T&D revenue (Excluding SAE Towers) was down by 1% to Rs 2434 crore. SAE Tower revenue though was up by 4% to Rs 319 crore that is not able to offset the fall in non SAE T&D revenue. The non T&D revenue (railways, Civil & Solar) was up by 23% to Rs 828 crore driven largely by higher revenue of railway and civil business rather than solar. While solar revenue was down by 83% to Rs 32 crore, that of railways and civil was up by 76% (to Rs 633 crore) and 29% (to Rs 163 crore). The revenue of cables was up by 26% to Rs 349 crore.

• Operating profit margin expanded by 30 bps to 10.4%. Marginal expansion in OPM is largely due to fall in all cost head barring erection and subcontracting expenses. While material cost, which as a proportion to sales, was down by 1050 bps to 47.6%. Similarly the staff cost was down by 20 bps (to 5.8%) and that of OE was down by 70 bps (to 6.9%). However the erection and subcontracting charges was up by 1050 bps to 28.8%. Thus facilitated by higher sales and marginal expansion in OPM, the operating profit was up by 8% to Rs 399.04 crore.

• Other income stand lower by 19% to Rs 6.34 crore and thus the growth at PBIDT was 7% to Rs 405.38 crore. After accounting for higher interest cost (up 38% to Rs 84.55 crore) the growth at PBDT was restricted at just 1% to Rs 320.83 crore. With depreciation stand lower by 5% to Rs 26.05 crore, the PBT was up by 2% to Rs 294.78 crore.

• EO income for the quarter as well as corresponding previous period was nil. Thus the PBT (after EO) was up by 2% to Rs 294.78 crore.

• The current tax including deferred tax was higher by 8% to Rs 100.89 crore and thus the PAT was lower by 1% to Rs 193.89 crore.

• The profit from discontinued operations was up by 649% to Rs 4.87 crore and thus the PAT after profit from discontinued operations was up by 1% to Rs 198.76 crore.

• The other comprehensive expense was Rs 1.57 crore, a swing of Rs 2.48 crore from an income of Rs 0.91 crore in the corresponding previous period. Thus the total comprehensive income was flat at Rs 197.19 crore.

Yearly performance

Consolidated sale (net of GST/excise) was up by 9% to Rs 10052.63 crore driven largely by 96.9% growth in non T&D revenue (railways, Civil & solar) to Rs 2757 crore and 17.2% growth in sales of cables to Rs 1183 crore. The SAE tower revenue was down by 5.7% to Rs 967 crore and the non SAE Tower T&D revenue was down by 6.65 to Rs 6338 crore.

The OPM was up by 50 bps to 10.5% and thus the operating profit was up by 14% to Rs 1149.91 crore. After accounting for higher other income, higher interest and higher depreciation, the PBT (before EO) was up by 8% to Rs 743.51 crore. With tax rate stand higher at 34.6% compared to 33.3% in corresponding previous period, the PAT was up by 6% to Rs 486.44 crore. Profit from discontinued operations (net of tax) was up by 338% to Rs 9.33 crore. After accounting for profit from discontinued business, the PAT was up by 8% to Rs 495.77 crore. Eventually the total comprehensive income was up by 13% to Rs 511.57 crore.

Order book

Order intake for FY19 was Rs 14084 crore. Order book as end of March 32, 2019 stands at Rs 20307 crore, a growth of 17% over the previous financial year. But the order book including L1 orders as end of March 31, 2019 stand at Rs 24000 crore.

Other developments

In an old legal dispute between Joint Venture (JV) of the Group located in South Africa and its customer, a sole arbitrator had passed an order on October 5, 2018 against the JV reversing a favorable adjudication award of Rs 62 crore dated March 17, 2017. The JV has filed a notice of motion before the High Court of South Africa on November 16, 2018 against the said arbitration order. Pending the final legal outcome and based on the legal opinion obtained from the attorney by the management of KEC International, no provision is considered necessary in the books.

The Group was awarded a contract to complete an 880 km 765 KV and 400 KV transmission line in July 2017. This project is of strategic importance for grid connectivity and stability of the Southern grid. The Group has completed almost 50% of the total project work Involving critical activities including foundation, tower supply and erection. The project construction has substantially slowed down since Jan 2019 subsequent to delayed payments from a customer due to liquidity issues. As on March, 2019, the Group has an exposure of Rs 145 crore. The current sponsors and lenders are in the process of discussion with various parties to identify a new sponsor and the timing/amount of recovery of the amounts outstanding is largely dependent upon finalization of the new sponsor. Management is confident of a positive resolution and does not foresee a material impact on the financial statements, due to the strategic nature of the project and considering the number of potential suitors for the project who are in active discussion with the lenders and the sponsor of the project.

Subject to the approval of shareholders to pay a dividend of Rs 2.70 per equity share of Rs 2 each for FY19.