Key takeaways of the call

Order book as end of June 30, 2019 was Rs 11429 crore compared to Rs 7229 crore as end of Jun 2018 and Rs 11188.7 crore as end of March 2019. Of the order book consultancy orders were Rs 4832 crore (or 42% of order book) and lumpsum turnkey orders were Rs 6597 crore (or 58% of order book). Of the consultancy order book domestic orders were 87% and overseas orders were 13%.

Orders booked/inflow in Q1FY20 was Rs 943.6 crore [consultancy domestic Rs 195.1 crore; consultancy overseas Rs 748.5 crore] compared to Rs 83.2 crore in corresponding previous period.

Order inflow in Q1FY20 was largely of one large overseas order worth Rs 514.17 crore Project Management Consultancy (PMC) Services for Construction of a Crude Oil Refinery Plant in Mongolia and one additional change order worth Rs 215 crore Dangote Oil Refining Company for PMC & EPCM Services for Dangote Refinery Project.

The company looks at an order inflow of about Rs 1800 crore for FY20 majorly from consultancy segment. Similar number is expected in next fiscal as well.

Expect 15-20% growth in revenue for FY20. Considering 3 major/large turnkey contracts on hand most of the contribution to come from turnkey segment. The company expects the segment margin of consultancy will typically be 25-30% and LTP for 5-6%.

Of the change order of Rs 215 crore, the company has booked Rs 90 crore. The balance portion will be recognized over the remaining period of the contract. The Dangote project is expected to be completed by Oct 2020.

Two Umbrella orders of both Panipat Refinery Expansion of IOCL & BPCL gives order inflow visibility for Rs 1000 crore. Panipat refinery Expansion is an umbrella contract committed to EIL. Of the total order value of Rs 675 crore about Rs 30 crore was awarded in Q1FY20 and the balance will be awarded in another two phases of which one package will be Rs 27 crore and balance Rs 617 crore is main package. Similar BPCL umbrella contract ((PMC Services (Phase 1 - FEED) for Petro Resid Fluid Catalytic Cracker Unit along with Sulphur Recovery Unit, Associated Facilities including U&O at Mumbai Refinery and Polypropylene Unit along with Associated Facilities including U&O at Rasayani) the initial phase order of Rs 56 crore received and recorded in Q1FY20. The second phases it could be around Rs 200-300 crore which will come in Q2FY21.

The company has bagged an LNG terminal order of Rs 80 crore. The company is also expecting one or two smaller size petrochemical orders for putting up poly propylene units.

Numaligarh Refinery expansion is expected to get finalized in second half of current fiscal. By end of this year or next year the company expects the green field Cauvery Basin Refinery (of 9mmtpa) at Nagapatnam Refinery. The company is also in the early pre feasibility study of Mangalore Refinery expansion from 15 to 25 MMTPA.

Some of the other pipeline orders in next 2 years are Numaligarh refinery which puts up a product and crude pipeline projects. The company is also eyeing an order for one crude oil terminal and strategic storage reserves at two locations.

International the company secured one change order the company could also secure one more change order to the tune of USD 5-7 mln.

This year the OBE(Open book estimate) basis projects that are in the process of execution see major traction. Rajasthan Barmer refinery will see placement of major orders and commencement of construction activity during current fiscal.

Execution of HPCL Barmer & HPCL Vizag turnkey projects – The company expects substantial recognition of revenue in HPCL Barmer only in next fiscal i.e. FY2021. However substantial revenue recognition is expected in current fiscal in case of HPCL Vizag order. Current progress for Vizag refinery project is around 52-54% and is under peak execution phase. However the Barmer refinery is in early stage project activity. Basic design preparation activity is going on. Barmer refinery is still another 6 months away to reach peak execution mode. The Barmer refinery contract is both consultancy (PMC) as well as turnkey contract (cost plus). After design package is ready, first engineering for procurement will begin and then site preparation activity will get awarded.

The company has 20% stake in the exploration blocks three wells are under development stage. The company has invested Rs 70-80 crore.

The opportunity for the company in Cauvery Basin refinery is about Rs 800 crore.

Mongolia project is funded through LoC of EXIM bank.

HPCL & GAIL's Kakinada petrochemical project is on hold. The project was on very advanced stage before it went into hold mode.