Key takeaways of the call

Order booking in Q1FY21 was Rs 500 crore and the company has booked orders worth Rs 400 crore in July 2020.

Consolidated orders on hand as end of Jun 30, 2020 was Rs 6546 crore and of which Rs 1284 crore is export orders. Of the order on hand about 78% is project orders and 22% is for product orders. Standalone order book as end of June 30, 2020 was RS 5900 crore (domestic orders were Rs 4850 crore and International is Rs 1060 crore) with project orders being Rs 5000 crore and balance are manufacturing and products. Strong EPC order book, supported by best-in-class capabilities, provide healthy growth visibility.

Of the order book the contribution from power is 37%, sugar 14%, railway is 13%, balance are from industries such as steel, cement etc.,

The management is making continuous efforts to minimize effect of Covid 19 on the operations in India and abroad during this time.

All factories are now working at full capacity and there are no labour issues. All the project sites are running. Average manpower is 95% of required manpower at most sites. Currently because of some skill mismatch between available manpower at sites, the productivity is not optimal, but the situation is improving every day.

Supply chain has largely recovered. All large vendors are now working at 100% capacity and other small vendors are working at about 50% to 100% capacity. Transport, Logistics and ports are working normally.

The Company has implemented a cut in compensation for FY21 and has optimised manpower in some business areas, which would reduce the employee cost by around 15%.

Only small part of the order book (Less than 2%) from customers have been put on hold, cancelled or deferred.

Most of the business divisions are getting good enquiries but order finalization has been slow. Expect many of the enquiries to be finalized soon, especially from PSU's. Railways, coal power, process industries, civil infrastructure are expected to get finalised. In air pollution control equipment including that from SEBs which are mandatory to get finalised.

Collection of payments from customers has normalized.

Adequate capital and financial resources: The Company has adequate financial resources in terms of liquid investments and borrowing limits available with banks for smooth running of business. The company is well placed to meet all its obligations.

Orders are going to be delayed to the extent of 3-6 months depending on location. The customers were informed and they are ok with that. The company has written to all customers enforcing force majeure clause.

In terms of outlook for FY21 it is too early to comment/indication on that given uncertainties. The company hope to exit FY21 on comparable level to that of last fiscal or slightly better unless there is nasty turn in Pandemic spread.

Confident of sustaining the Q1FY21 margin for balance period of current fiscal considering the order on hand.

Gross debt Rs 319 crore and net debt (adjusting for investment in MF and cash) is RS 121 crore.

The focus for current fiscal is on execution of current healthy orders book.

Unexecuted NTPC FGD order book of the company is about Rs 700 crore.

Trade receivables including retention money as end of June 2020 was Rs 1840 crore.

The company is not looking to running the Philippines plant but looking for a buyer.

NTPC FGD order has an impact on working capital of the company as it has higher retention money component.

Expect competition from Chinese player to reduce under current political environment for both public sector as well as private sector orders.

ISGEC Hitachi Zosen has good order book. But Q2 will be subdued for it as materials are stuck in BMumbai port.

Automotive sector is the worst hurt and hitting the company badly. The revenue loss from automotive sector due to pandemic is roughly about RS 150 crore.

The company is doing civil works in its EPC projects for long time. The civil works typically comes with PVC clause.