The company held its conference call on 26th October 2016 and was addressed by Mr. Ankur Patni Executive Director
Key Highlights
Of the total sales of around Rs 202 crore for Sep'16 quarter, engineering segment revenue stood at around 109 crore (56% of revenues) and grew by around 0.4% YoY. Ebit grew by around 2.9% to Rs 3.5 crore. Chemicals business grew by around 1.2% to Rs 76.6 crore for Sep'16 quarter and the EBIT margin grew to Rs 10.8 crore, up by 1.9% YoY. Loss from consumer business got reduced by 11% to Rs 0.8 crore.
Engineering segment growth was almost flat on YoY basis in Sep'16 quarter. Overall business environment is recovering gradually.
Investment on government side is picking up which will help the engineering division. The industrial side particularly on the small side projects some improvement was visible but nothing to be exciting. However order inflow should improve from this side going forward.
Once the scale comes, margins will improve in engineering segment. As per the management, the margins can improve significantly in engineering segment, if the turnover increases.
On Srilankan order, the drawings and other works have been initialised. As per the management, by end of Dec'16, the work should commence from this order. Initially, there will be some expenditure booked for htis contract, as the revenue booking will take some time. The order value is of around US $ 200 M.
Over and above Srilankan order, the current order book position is around Rs 600 crore which is more or less hovering around this level for past 12 months now. The order pipeline and the orders tendered out are worth around Rs 3500 crore. Management expects gradually, the position of order book to improve specially by end of Mar'17.
Exports business is also almost flat on an overall basis. While some markets like Africa, CIS countries are doing well, Middle East and Gulf have been affected. The company will increase further its presence in international markets going forward.
For Chemical segment, while the sales grew only by around 1.2%, lot of billing could not be done in Sep'16 quarter and hence the performance of the chemical segment is better than what it is otherwise seen as a 1.2% growth in revenues on YoY basis.
The profitability of some products has improved in chemical segment and the company was able to retain some benefits of lower raw material cost as well. Lot of initiatives were taken in this segment and management expects the effect of the same will be visible going forward.
On consumer business, the efforts will be to reach in profits by end of FY'17. While its a challenging task, given the pricing and increase in competition, lot of work has been done on this front as well.
As per the management, there are no further updates on land deal as on date, other than the one that is mentioned in the annual report 2016. Management expects the case can continue, but it will not affect the company in any way, as per the legal advice. More clarity will emerge by the year end FY'17.
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