Key takeaways of the call

Revenue for the quarter was lower by 32% to Rs 771.51 crore. But the operating margin expanded by 260 bps to 14.3% which has minimized the damage of lower sales growth at operating profits level with operating profit degrew by 17% to Rs 110.20 crore. However strained largely by higher interest cost the PBT was down by 35% to Rs 76.06 crore and the PAT was eventually lower by 34% to Rs51.35 crore gained by 150 bps fall in tax rate to 32.5% on yoy basis.

Capital goods contributed about Rs 91 crore to topline compared to about Rs 55 crore in the corresponding previous period. Revenue mix in terms of EPC: BoP for the quarter stood at 55% for EPC and 45% for BoP.

Fall in revenue for the quarter was largely on account of delay in material inspection and clearance on the client side as well as approval issues in Engineering & Design. This forced majority of the revenue to slip to Q3FY12/H2FY12.

Better margin is on account of change in revenue/product mix. The contribution of high margin BoP and capital goods supply were higher for the quarter compared to corresponding previous period where the share of EPC is dominant. Greater contribution from BoP projects of Chandrapur and Malwa has boosted the margin.

Order book as end of Sep 2011 stood at Rs 7270 crore of which capital goods order amounting Rs 1120 crore.

Expects to close the current fiscal with a revenue of Rs 4850 crore. EBITDA margin of 12-13% and PAT margin of 6.5% is to be sustained.

Having clocked a revenue of about Rs 1500 crore in H1FY12 the company expects a revenue of about Rs 3350 crore in H2FY12 and of which about Rs 1000-1300 crore to happen in Q3FY12 and about Rs 2000 crore in Q4FY12.

Debt is up only on account of higher receivables. The Drs days are about 150 days. Some payments are struck with certification issues and are being sorted out. Similarly the retention money as end of Sep 2011 stood at Rs 1300 crore (Rs 1000 crore as end of March 2011) and of which that pertain to completed project is about Rs 300 crore with balance being towards on going projects. The company expects the retention money from completed projects such as Kakatiya and Vijayawada to come in by March 2012 or Q1FY13 facilitating cut in Working Capital cycle. Currently the WC cycle is more than the normal 90-120 days due to receivables getting delayed.

Investment commitment in Hitachi JV is about Rs 250 crore for FY12 and of which the company has invested about Rs 205 crore so far. FY12-13 commitment is about another Rs 300 crore.

Mettur project is in commissioning phase. As far as Kalisindh is concerned, synchronization of unit 1 is by March 2012 and second unit by Sep 2012. As far as kothakudam project the TG set test is on.

The company has recognized about 95% of the revenue in Kakatiya, about 90% in mettur, Malwa about 30%.

Expects LoA from NTPC for 5X900 TG sets by November/Dec 2011.

Orissa Order under tendering is about Rs 6000 crore together for both BTG package as well as BoP package.