Key Highlights

The company had executed an indirect export order in Mar'16 quarter which was not present in Mar'17 which lead to a lower net sales for Mar'17 quarter. Overall, on volume wise, net sales were lower by around 11% to 5966 MVA in Mar'17 quarter.

Further delays in dispatches lead to further execution delays in Mar'17 quarter, which affected the net sales. The dispatches will happen in FY'18.

The EO expense of Rs 12.55 crore for Mar'17 quarter relates to a provision for doubtful debt including liquidity damages which was required to be made as per Revised Accounting standard. Management expects to recover the amount going forward.

For 12 months ended Mar'17, the company reported net sales in volume terms of around 24428 MVA as compared to 16202 MVA for Mar'16.

Of the total sales of around Rs 802.24 crore, around 72% of sales is from power sector and rest from industrials including renewable segment. Rs 213 crore of sales came from utilities, Rs 212 crore from industrial and rest from exports.

Overall, the industry is now operating at around 75-77% capacity utilization as compared to around 66% at the start of FY'17. The company operated at better capacity utilization than the industry.

The company has total order book of around Rs 960 crore as on Mar'17 which includes order from PGCIL of around 23% and around 24% of order book is from GETCO. Almost all orders are with PVC clause so the current increase of CRCO prices will not affect the margins.

Overall, with current capacity, the company can generate net sales of around Rs 1200 crore without any additional capex.

Total debt stands at around Rs 184 crore as on Mar'17 with average cost of debt of around 10.5%.

The company is moving towards Ebidta margin of around 12% in next 3 years. 10% will be like a threshold margin in the next 3 years. Higher capacity utilization, more matured competition, large export orders and cost control will lead to higher margins.

The company has signed 2 JV. The first one being with Chinese company for 220 KV GIS transformer capacity which will envisage an investment of around Rs 12 crore in FY'18. The other one being a onsite servicing transformer JV with a Canadian technocrat. The segment is a niche segment with higher margins.

The company got a break through with partial large transform export order execution in Australia. This will lead to higher orders going forward and these orders will have higher margins.

Going forward good orders are expected from various SEB's such as from TN, Andhra, UP, Haryana, Tehlangana, and Uttaranchal in FY'18.

Overall for FY'18, management expects around 12-15% growth in net sales with higher Ebidta margins.

Bulk of generation taking place in the country is in renewable space. 15% of total order book is from renewable sector.

The company has around 144 debtor's days which is normal in the industry. Working capital requirement should remain around current level as per the management.