Key takeaways of the call

Consolidated order backlog as end of Sep 2013 at Rs 826.6 crore has more than doubled from about Rs 390.5 crore, a year ago. Of the total order backlog 88% is domestic orders and balance 12% being exports. The manufacturing order backlog was at Rs 282.2 crore, the projects order backlog was at Rs 96 crore and EPC order backlog was Rs 448.4 crore. Of the manufacturing and projects order backlog the share of exports stood at 36% and 8% respectively but the EPC order book is entirely domestic.

TG Project order intake stood at Rs 63.38 crore for H1FY14 compared to Rs 78.6 crore in the corresponding previous period. Similarly the EPC order intake was Rs 12.86 crore compared to Rs 4.3 crore in the corresponding previous period. Overall manufacturing order booking in H1FY14 has increased by 20% to Rs. 171 crore and of which the exports orders alone was up by 23% to Rs 65.4 crore (up from Rs 53 crore in H1FY13)

Our order book has now crossed Rs. 800 crore, over double the year ago level with strong export visibility. We believe that the cycle is turning more positive and our recent initiatives should deliver significant upsides as we scale our operations from the current level.

Revenue guidance (on consolidated basis) for FY14 – the manufacturing revenue expected is about Rs 370-390 crore and that for EPC is about Rs 120-130 crore. The company expects the EBITDA margin of manufacturing to be around 16-17% and that of EPC to break even for the full fiscal.

Export visibility remains strong with increased export orders inflow. The company while gaining market share in manufacturing with existing overseas customer relationships it is also winning orders with new customers. Recently in Q2FY14, three large overseas customers were added, two turbine manufacturers and one diesel engine OEM. Enquiry order intake is on uptick. Not seeing any momentum issue in this regard and this gives visibility for next year.

In India, very high level of uncertainty is a concern. The company has received several generator orders in the sugar sector. Order in sugar sector have become seasonal and tapering off. Sugar order become seasonal means some orders got finalized during Aug-Oct of every year ahead of crushing season in sugar sector and after that there will be nothing. And this year also there were some orders and that has been already finalized. No manufacturing order for negotiation in the domestic market as of now. If the current uncertainty detoriate further the company has to review its guidance for next fiscal.

The company expects the execution of Dalmia Cement (Karnataka) and Shree Cement is expected to drive growth.

But the company now see small signs of improving visibility. Execution is scaling up and this should enable it to deliver manufacturing revenues as per plan, with over 40% export contribution.

Execution in the projects business has scaled up based on traction in overseas markets. EPC order book has ramped up substantially but it sees weakness and uncertainty ahead.

Expects Capacity utilization to improve going forward.

Capital expenditure plans of the company is on track and will be commissioned by end of current fiscal.

H1FY14 revenue was lower by 40%yoy to Rs 200.65 crore and the EBITDA was lower by 39% (to Rs 25.32 crore) as the EBITDA margin nearly stayed flat at 12.6% compared to 12.5% in corresponding previous period. But the PAT was lower by 62% to Rs 8.35 crore. Lower sales is due to weakness in the projects and EPC businesses, whereas the manufacturing revenues remained flat. H1FY14 exports revenue was flat at Rs 60 crore. Lower H1FY14 revenue indicates continued weakness in the market. Profitability has been impacted due to lower revenues leading to unabsorbed overheads. The company has also incurred additional cost from U.S. subsidiary in H1 this year.