Rajiv Mittal, Managing Director and S Varadarajan, Executive Director addressed the call.

Highlights of the call:

For the quarter ended March 2018, Va Tech Wabag reported a 8% fall in its consolidated sales to Rs 1037.48 crore. OPM fell 210 basis points to 9.6% which saw OP fall 24% to Rs 100.02 crore. PBT fell 30% to Rs 81.57 crore. Net profit fell 21% to Rs 59.65 crore.

For FY 2018, consolidated sales grew 8% to Rs 32457.28 crore. OPM fell 80 bps points to 8.4% which saw OP fall 2% to Rs 291.76 crore. PBT fell 6% to Rs 221.89 crore. Net profit grew 28% to Rs 131.51 crore.

In FY 2018 revenue growth was subdued by GST introduction for Indian projects, reducing topline.

In FY 2018, the company received higher dividend from profitable overseas project execution in MEA.

On a standalone basis, the increase in finance cost is mainly due to higher bank charges associated with execution and new projects.

Consolidated short term borrowings jumped from Rs 245.9 crore to Rs 427.4 crore in FY 2018.

Consolidated receivables grew from Rs 2123.8 crore to Rs 2456.1 crore in FY 2018. On the other hand trade payables grew from Rs 1257.4 crore to Rs 1489.9 crore in FY 2018.

Net Working Capital (days) jumped to 98 days from 68 days as on March 2017 end.

Consolidated cash and bank balance stood at Rs 185.2 crore. However it was down from Rs 261.7 crore in FY 2017.

The company is witnessing strong progress in key overseas projects and IIUs and this is the reason for the growth in top line.

The company is benefiting from overseas business executions. In FY 2018 both sales and EBITDA from overseas entities improved 14%, backed by better results in Europe

Overseas Total Cost of Operations (TCO) was firmly under control. The company managed this due to cost optimizations in Europe. It also helped it in improving net margins.

The company is a major beneficiary of Namami Gange scheme introduced by Government of India to bring life to river Ganga and rejuvenate it. It has around 14% market share in this sunrise sector of India.

Total outlay for Namami Gange is estimated at Rs 20,000 crore. The company intends to bid for these projects with a consortium partner.

The company expects good orders from Namami Gange project. It has already secured projects worth over Rs 500 crore under the Namami Gange.

It secured an order for Rs 253 crore from Bihar Urban Infrastructure Development Corporation (BUIDCO), under Namami Gange / National Mission for Clean Ganga-NMCG. The scope includes survey, review, redesign and build new sewerage system along with a pumping station and operation and maintenance of 10 years at Karmalichak, Patna. The project will help in meeting the sewage treatment needs to ensure that no untreated wastewater is discharged in the River Ganga from this zone.

It got another order worth Rs 147 crore by BUIDCO towards design, build and operate 60 MLD Sewage Treatment Plant at Pahari, Patna.

It has also received orders for upgradation of two STP's at Haridwar.

The company is well positioned in Europe, Middle East, Africa and South-East Asia.

Under integrated city management model for Namami Gange the company estimates large scale projects summing up to Rs 5000 crore in Kanpur, Allahabad, Patna and Kolkata and sewage treatment & network projects worth Rs 1,000 crore in Bihar under BUIDCO.

The management is glad to witness the steady flow of orders under Namami Gange.

The management feels that the company is well positioned with it's experience in handling water treatment of 7.4 Million m3/day at 124 locations in Istanbul. In Istanbul, the company does 24/7 management of the wastewater catering 16 million inhabitants of Istanbul.

On standalone basis, revenue growth was subdued due to GST introduction for Indian projects. This was the main reason for reducing topline.

Total order book is more than Rs 7500 crore, including framework orders. India order stood at Rs 4755.9 crore and over seas order book stood at Rs 2052.7 crore. Frame work contracts stood at Rs 934.5 crore. Frame work contracts are those contracts wherein Advance Monies / LC awaited, hence not taken in Order Book

Order intake stood at Rs 3193.1 crore in FY 2018. Out of this, Rs 2195.3 crore came from India and Rest Rs 997.8 croree came from overseas.

Revenue guidance for FY 19 is in the range of Rs 4000 crore - Rs 4200 crore.

Order Intake guidance for FY 19 is in the range of Rs 5300 – Rs 5700 crore.

In May 2018 the company received an order for Rs 296 crore from Delhi Jal Board towards rehabilitation and up-gradation of the 182 MLD Waste Water Treatment Plant at Rithala under the Yamuna Action Plan. The scope includes design, supply, construction, commissioning including operation and maintenance for 11 years.

This repeat order reflects the client's confidence in and the company's capabilities. This is a testimony to the fact that WABAG continues to enjoy the status of Most Preferred Supplier in water and waste water treatment space.

Domestic order was not encouraging for the last couple of years but now this has improved. For Namami Gange, not only orders but lots of tenders are now flowing. Government orders are increasing. More traction is likely to happen in Namami Gange and government accounts.

Oil and Gas is seeing lots of clearance in refining and petrochemical expansion. Wabag is globally a very strong player in Oil and Gas and Industrial segment. Thus the management views this as a very positive sign for the domestic order flow in coming months.

Strategy is to focus on emerging markets.

Margins will improve gradually.

60% of orders are based outside India.

Ticket size of projects is growing.

Net working capital is 98 days. GST amended order still are not received for government contracts as it is still unclear as to how much GST will be borne by the government.

By March 2019 working capital will reduce.

Receivables are currently at 250 days. Receivables will remain high. After receiving APGENCO money, receivables will fall down to 200 days.

Next year analyst meet, the company will have net cash.

Funded projects will require cash. Normal projects will be funded from within.

Margins in international orders are much higher and ticket size is higher.

This year there was slippage in guidance given last year.

Mumbai projects are not cancelled but postponed.

French and Spanish companies are likely to come with local partners and reduce margins in India.

Timing for receipt of money from Municipalities is important. There is no bad debt in municipalities.

Istanbul is a 15 year commitment.

The company is going into sludge management. It will make compost and sell to farmers.

Cash flow was negative in FY 2018.

The company has presence in over 15 countries. Along with its 17 subsidiaries, the company provides EPC and O&M solutions to municipal and industrial clients.

O&M comes with EPC order now. Earlier they were separate.

The company has management control even when it is in JV with local partners.

The management sees huge potential in water treatment business.

The company has never raised money. IPO was to give exit to investors. The promoters have not sold a single share.

New orders are coming in similar margins.

Execution should improve in coming quarters.

Global order book should be healthy going forward. The company's major overseas market is Middle East. With the oil prices firming up, outlook for both Municipal and Industrial areas should be on the rise.

In the medium-longer term the company is looking at Africa and Latin America to fuel its growth. In both markets the company has good presence. The company is strengthening its team there.