Key takeaways of the conference call

Sales for the Q1FY12 was down 19% to Rs 731.18 crore and a net profit was down by 17% to Rs 50.25 crore. The operating margin expanded to 12.7% up from 11.3% in the corresponding previous period. Revenue mix for the quarter is Rs 673.02 crore from Construction and EPC business and about Rs 58.16 crore from capital goods. The share of BOP out of the total construction and EPC revenue was about Rs 245 crore.

The EBITDA margin is a function of order book composition and mix between EPC and BoP. Normally in BOP, the margin is better at 14-15% compared to a margin of about 10-11% in EPC. If the share of EPC to topline is higher the company will maintain a EBITDA of around 11-12% only.

The expansion in EBITDA margin for Q1FY12 is attributable to the ratio change in the company's revenue mix between BoP and EPC earnings. The share of BoP was about 66:34 in case of EPC and BoP as against about 80:20 in corresponding previous period.

Of the total order backlog of Rs 7500 crore as end of June 2011, the EPC order backlog is Rs 1600 crore. CG has a order book of 700 crore. Baring Rs 40 crore order for Capital Goods the company has not booked any major orders during Q1FY2012.

The EPC order backlog is expected to be completed before the end of current fiscal. The Metur and Rajasthan orders will be completed soon. On BoP front the Kalisindh, Chandrapur and Marwah were completed to the extent of 90% and the Krishnapatnam is about 30%.

The company is confident of registering a significant growth in its sales income from revenues coming in from EPC and BoP orders at hand in the current year itself.

Release/finalisation of power sector orders were slow impacting the order intake for the quarter. The delay is on account of coal linkage or environmental clearance.

With coal linkage and environmental issues heading for resolution, contract awards for capacity addition from both the IPP and public sector segments is set to significantly increase in the current financial year. In next two quarter most of the power sector projects are expected to see progress toward maturing for order finalisation. The company is well positioned to service this demand and thereby capture a substantial market share.

The company hopes to secure major orders in response to its bids for projects worth over Rs 37000 crore, comprising mandates for the supply of BTG, gas and coal based EPC and BoP projects, representing a capacity of 19,700 MW. Of these 19700 MW crore bided, NTPC orders alone was 12000 MW, Rajsthan was about 1300-2000 MW, OGPCL is about 1300 - 2000 MW. The company has also submitted bids for some gas base power plants floated by utilities/IPPs.

Expects LoI to be awarded by end of Q2FY12 as far as NTPC bulk tendering of 9 units of 800 MW sets. Depending on the court judgemetn the order finalisation of 11 units of 660 MW is also to get finalised around the same time by NTPC.

The company has put in its bids for OPGCL project for which the coal mines is cleared. Similary coal linkage is available for one project of Rajastan SEBs. Hoep things will get better in next quarter.

Apart from BTG order the company has also put in bids for BoP orders with a generation capacity of about 8000 MW.

Capex planned for FY12 is Rs 45 crore basically on construction equipments.

On BTG JV - the project cost of both boiler and turbine plant is Rs 4400 crore. The equity contribution from the company is Rs 950 crore and that of Hitachi is Rs 350 crore and the balance will be debt. Of the total debt about 40% will be drawn in FY 2013 and balance 50% in FY2014. Major part of the required land is in hand and balance land were in in the process of acquisition. The company expects the TL sanction to come in next 2 months.

Expects a revenue growth of 14-15% for FY12. It hopes to maintain a net profit margin of about 6-6.5% for current fiscal. Even with out any major order intake the company is confident of clocking a revenue of Rs 5300 crore for FY12.

Even if the company is not getting BTG and BoP orders the company will take up erection and commissioning of plant for Chinese players.

On overall basis the interest cost to be at 2 to 2.5% of the topline. On weighted average basis the interest cost is 8.5% only. Total borrowing is Rs 1800 crore of which buyers credit is Rs 500 crore. shorterm loan at lower rate which is stand at Rs 500 crore. For the balance the company is trying to reduce the interest cost.

The retention money in Kakatiya and Vijayawada aggregate about Rs 350 crore.

RJVUNL order for Surathgarh and Chhabra and the tender terms clearly states that one project for one player. Even if BHEL emerge as L1 for both the projects BGR will be asked to match the bids of L1 and there is possibility of BGR securing one of the orders.

Opening OB for the first quarter is Rs 7971 crore of which execution in Q1FY12 is about Rs 730 crore. Considering a order intake of Rs 40 crore the order book should be only Rs 7200 crore. But given the USD forex change the value of Rajasthan contract got reviewed and thus the order backlog is about Rs 7500 crore with a variation of Rs 300 crore.