Key takeaways of the call

Revenue lost on account of lockdown in Q4FY20 was about Rs 300 crore as the company could not despatch due to lockdown.

Order inflow in FY20 was Rs 3919 crore, order backlog as end of Mar 31, 2020 was Rs 6916 crore of which about Rs 5414 crore were project orders and products were Rs 605 crore.

Of the current order book export orders were about Rs 1500 crore. Moreover about 47% of the current order book is from Government sector including PSUs.

Customer side issues like deferral of despatch, putting project on hold, payment issues are few including smaller projects in Auto Sector etc and this is not big chunk of the order backlog. Only 2% of order backlog is facing issues related to customers. Moreover with Force majeure clause in the contract, the company is not expecting any impact on account of delay in project completion.

Both project execution and manufacturing were hit during Q1FY21. On restarting after lockdown, manpower at EPC project sites was only around 30% of normal, and now it has reached about 70%. (It will take at least 2-3 months for situation to become normal). All factories which were closed during lockdown are now working at full capacity and there are no labour issues. Issues related to supplies have been resolved to a great extent, as large vendors of the company are now working at 100% capacity and other small vendors are working at about 50% capacity due to migrant labour issue. The situation has improved at most of the ports as the company was facing clearance of import consignment at Mumbai Port and that is sorted out now.

Of the EPC office workforce the company has asked 50% of the people to work from offices and balance to work from home. Offices in Noida, Chennai and Pune have restarted, with requisite precautions including social distancing.

The company sees enquiries coming in Q1FY21. The private sector is cautious with slowdown in decision making and thus the company concentrate now more on PSU orders.

The company is L1 in quite few orders of significant size. Order under pipeline (tenders floated/bided) is about Rs 1000-1500 crore.

FGD – NTPC's lot 4 & 5 is already finalised and the company has not participated due to capacity constraints. The company will participate in lot 6 of orders. In some of the earlier tenders there were Chinese participation. The company imports some components for FGD and the company is in negotiation with NTPC whether imports from China is allowed or not but it is too early to comment on it. If Chinese imports are not allowed the cost may go up. State tenders are from Odisha, UP, TN and Haryana.

Order booking and backlog of Hitachi JV is about Rs 250 crore in FY20 and Rs 450 crore as end of March 2020. Factory was shutdown in March & April 2020. Despatch of a consignment in Q4FY20 was delayed due to lockdown and was made in Q1FY21.

The sugar subsidiary is planning to set up an ethanol plant of 110 KLPD capacity. The planned capex of it is about Rs 180 crore. The ethanol plant is expected to get commissioned by June 2021.

Salary bill will be down by 15% this fiscal with the company is effecting salary cut for staffs and senior management whose salary is above 8 lakh. Senior management has taken a salary cut of 30% and top management at 70%.

Sale of Philippines subsidiary acquired is delayed by 6 months on account of COVID. The ban on travel is major hindrance but the company got lot of interest for the project. The company has no immediate debt servicing commitments with bankers restructuring the debt.

Cash and bank balance as end of March 2020 was Rs 120 crore.

The company looks at a margin of 9% for Equipment segment and 4-5% for EPC segment.

Large orders are expected from PSUs in areas such as Railways, Air Pollution Control Equipment, Refinery, Fertilizer, Hospitals, Airports and Civil Infrastructure and few others, which will compensate for any possible slowdown from private sector. The company is exploring larger Civil work projects and will be bidding for construction of small Airports.