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Analyst Meet / AGM - Analyst Meet

Expects FY 19 to be a good year from order inflow prospective

Ion Exchange

21-Mar-2018, 02:36
In interaction with Mr. Ankur Patni Executive Director on 20 March 2018.

Key Highlights

Order book position as on date in engineering division as on date is Rs 550 crore. 65% is from India and rests are from international market. This does not include Srilankan order which is around Rs 1050 crore left as on date.

Order pipeline is of around Rs 4500 crore. Expects strong order inflow to happen in the next 12 months.

Few orders within the order book are past backlog of slow moving orders, which will be over in next 2 quarters.

There was a period of lull in ordering post GST due to issues on modification of contract value etc. however most of them have been sorted out well in favour of the company and orders have now started to execute.

Expects FY 19 year to be a good year from order inflow prospective. Tenders from Municipality, Namami Gange and from other industries are expected. Being an election year, the tendering activity will be strong.

Around 15% of the Srilankan order will be over in FY 18 and substantial portion will get executed in FY 19. Expects such orders to come in from international markets in next 12 months or less time frame.

Srilankan orders have better margin profile as well.

Competition generally behaves rationally but sometimes some companies also take orders irrationally and leads to some disruption. Otherwise, more or less bids are near about each other.

Internationally the company is present in 3 geographies. Middle East, South East Asia and Africa. While Middle East is doing well for the company, there are issues in Africa and some in South East Asia. Expects FY 18 performance of subsidiaries to be better than FY 19 and similarly FY 19 to be better than FY 18, but still the breakeven at PBT level will happen only in FY 20.

The issue is after incurring large investments in these subsidiaries, the order inflow is muted. The company will not take orders which are not duly funded well.

Around 50% of sales of the company which comprises of resins and chemicals, membrane sales and O&M services is more of a steady and confirm business for the company. Its the balance 50% which depends upon tendering, competition and other macro economic factors.

Expects to incur a capex of around Rs 50 crore in next 15 months in Resins segment. There will be some debt that the company had to tie-up for this capex.

Consumer products business sales are around Rs 100 crore with very good gross margin. However the administrative cost including the employee, warehousing and others are so high that the division is in losses. Expects the segment to break even in FY 19.