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Supreme Infrastructure held a conference call on May 18, 2011 and in the conference call, the company was represented by Vikas Sharma, Whole Time Director.
Key takeaways of the conference call
Supreme Infrastructure (SIL) has posted a 148% rise in net profit at Rs 27.37 crore on 88% rise in total income to Rs 327.96 crore in the quarter ended March 2011 on y-o-y basis.
During the quarter, the company has successfully completed NHAI at Chitradurga highway project worth Rs.100 Crores. Also, the work of the first 3-level flyover at Transport Nagar Chouraha-Jaipur of worth Rs.65 crore on May 10, 2011 and has now started executing the power project.
In FY 2010-11, the company reported 91% rise in net profit to Rs 74.81 crore on 72% rise in total income to Rs 922.78 crore.
Order book and its composition
Current order book (including L1 orders at Rs 713 crore) stand at Rs 3117 crore. Of the total order book, orders from Maharashtra accounted for 76%, Haryana 11.77%, Punjab 7.83% UP 1.64% and West Bengal 2.8% and remaining of 0.39% from Rajasthan and Karnataka.
The order book mix is about 39% from roads, 3.5% from bridges, 0.7% from Railways, 47.6% from Buildings, 0.5% from irrigation, 7.7% from power, 0.1% from sewerage and the balance 0.9% is accounted by others.
Of the total orders, Govt. orders stood at Rs 2020 crore (64.8%) in which BOT (Build Operate Transfer) accounted at Rs 1063 crore (34.1%). Non Govt. orders amounted to Rs1096 crore (35.2%). Of the total order book, Confirmed orders were at Rs 2403 crore (77.1%) and L1 orders stood at Rs 713 crore (22.9%).
Order inflow
The three new orders added during the Q4FY11, including Rs 270 crore order from Oswal Chemicals & Fertilizers at Mumbai, Rs 22 crore order from build Orbit Corporation at Mumbai and Rs 69 crore order to build Residential Bungalow at Juhu (Mumbai).
Order Burnout / execution
The company expects the orders of Rs.3117 crores to be executed over a period of next 18 to 20 months. So Sharma expects numbers to be better than FY'11 in coming quarters.
Strategic stake in Rudranee Infrastructure
SIL is set to acquire 51% stake in Rudranee Infrastructure Limited by making specialized strategic investment of Rs 18 crore. Rudranee with a technical pool of 200 head counts has had experience of functioning in almost every sphere of infrastructure development. It is into diversified segments such as Roads Projects &BOT, Bridges &Aqueduct, Housing Project, Earthen Dams, Hospitals, Industrial sheds, Water Supply Schemes and Airports. So, Sharma expects to widen their expertise, by drawing strength from Rudranee team.
JV with Bengal Tools
Company plans to scale up presence in Eastern India. It has already entered Kolkata, and it is hopeful of qualifying to participate in new tenders coming out of India Railway Connectivity. To broaden its base, SIL Infrastructure has entered into Joint venture with Bengal Tools. The latter is a designer and manufacturer of a wide range of products like industrial Knives, Spares for Thermal Power Plants, Material Handling System, Fabrication of Mild Steel, Stainless Steel & Aluminum, and various Defence Products and has a well-equipped modern machine shop including heat treatment, precision grinding and fabrication facilities of all description including sheet metal work. SIL Infra will bank on the strength of Bengal tool to qualify and participate in such tenders.
Select projects
Order of ESIC Hospital at Andheri, Mumbai for Rs 90 crore has been confirmed. This was L1 in Q3FY11.The project of Rs 69 crore was awarded by Director General Married Accommodation Project (DGMAP) for the construction of Dwellings units for officers, JCOS/OR at Babina in Jhansi is under process .The estimated time for completion is projected to be 25 months and the total cost is Rs 51crore.
The order for the construction of multi storied high rise towers for the project named, Hex City situated at Navi Mumbai of worth Rs.137.50 crore is expected to be completed by March 2013.The other order for construction of dwelling units for DGMAP, Kolkata worth Rs 71.10 crore is expected to be completed by December 2013. The specific designs and Critical Path Method (CPM) charts required for the projects are to be completed within next one and half months.
The order bagged by SIL from Mahalaxmi TMT for laying of foundation and construction for the steel plant at Jalna-Wardha of Rs 30.35 crore expected to be completed by June 2012.
Successfully bid for DGMAP projects and expects order book position for this project to be around Rs 200 – 250 crore in the current fiscal.
SIL has bagged the contract for the construction of four laning of 61.71 km of roads at Ahmednagar-Karmala-Tambourine in Maharashtra. The total worth of the project is estimated at Rs 560 crore. The growth rate of this project is expected to be at 5% in the first three years and 6% for the next three years. Of the total cost of Rs 480 crore, the preference allotment to promoters will bring in about Rs 50-60 crore while internal accruals will be about Rs 60-70 crore. The company has been declared as L1 (lowest bidder) for this project by the Public Works Department of the Government of Maharashtra. The Concession period of the project is for 23 years, 11 months and 10 days (including the construction period of 24 Months).
BOT Projects
For BOT projects, the company is estimating Internal Rate Of Return (IRR) of 18%-19% factoring in increase in the real estate and other costs, besides tremendous increase in the project specifications.
BOT assets are estiamted at Rs.230 Crores
Among BOT projects, Manor Wada Bhiwandi project is currently under construction and has completed to the extent 19% and targeted date for completion is July 2013. Project corridor is an important link between Industrial area of Thane- Bhiwandi and Northern India along with Southern Gujarat. The total project cost is Rs 430 crore, out of which equity commitment is about Rs 107 crore and that of debt is about Rs 327 crore.
Ahmednagar, Karmala and Tambourine project financial closure is underway and LOI awaited, to be received shortly. Out of the total investment of the project Rs 480 crore, equity share is Rs 120 crore and that of debt is Rs 360 crore.
Kasheli Bridge project is estimated to be completed in Q2FY12 and expects to collect Rs 1.5 lakh per day.
Haji Malang project received Supreme Court clearance and will start process for financial closure. The total project cost of Rs 850 crore is committed through equity by Rs 25.50 crore and by debt is Rs 59.50 crore.
Panvel –Indapur project financial closure is underway and this project is part of the lucrative NH-17.The total project cost is around Rs 1250 crore, out of which equity is committed to Rs 312.5Crores and that of debt to Rs 937.5 crore.
Other Highlights
Debtor's turnover period to the company stood at 80 days and that of creditors at 45 days during the FY'11. During the quarter ended March 2011, the company's interest cost surged 119% to Rs 13.35 crore. The surge in interest costs was due to hardening interest rates and also due to increase in total debt to Rs 400 crore. Part of these incremental debts was for new office building, plant and machinery. Besides the funds were used for paying margin money and for bank guarantees in respect of tenders and orders.
The provision for tax tumbled down by 65% to Rs 1.86 crore in the quarter ended March 2011. This is due to certain allowances carried forward due to excess payments earlier etc.
Guidance
Expecting topline of Q1FY'12 to stand at Rs.470 to Rs 480 crore and Net profit margins of 6.7 to 7%.
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