Analyst Meet / AGM - Analyst Meet
Total order book position of around Rs 2500 crore as on Aug'15 provides revenue visibility of more than 2 years
The company held its investor meet on 30th Sep'15 and was addressed by Mr. S Bansal MD
Key Highlights
The company's business is broadly divided into Engineering division (about 90% of FY'15 sales) and PVC pipes division (about 10% of FY'15 sales). The Engineering business comprises of manufacturing Transmission Towers, GI pipes and monopoles.
The company is engaged only in manufacturing Transmission towers and does not take any erection or turnkey orders. The company has a tower manufacturing capacity of about 175000 Tons P.A.
Total order book within Transmission tower segment is about Rs 2500 crore as on Aug'15 which provides revenue visibility of more than 2 years. About 49% of orders are from Power Grid and rests are export orders from countries like Nigeria, Colombia, Chile, Nepal, Ukrain etc.
Export orders are fixed price contract orders.
Within the Engineering division, sale from GI pipes stood at Rs 125 crore in FY'15 as compared to about Rs 250 crore. While the rest of sale within the Engineering segment is predominately of Transmission Towers. Going forward, the sale of GI pipes business is further expected to come down, as there is hardly any margin left in the segment, given the current demand and supply and current volatility in prices and tough competition. The market of GI pipes is shrinking and company wants to gradually completely come out from this segment.
The company's manufacturing Tower plant is located in Eastern India. The company is a preferred player for orders from PGCIL in the geography of Eastern connecting Transmission lines be it Eastern Western or Eastern Northern Transmission lines.
The company is fully backward integrated as far as manufacturing transmission towers are concerned. It has significant location advantage and its cost of production of a single tower is least among the entire industry.
Of the total order book of around Rs 2500 crore of transmission towers, it has about Rs 200 crore of orders which are to be executed on EPC basis. The order was such that it had to be given only on EPC basis and not on a piece meal basis. The company does not have any plans to enter into turnkey or construction business in a big way otherwise.
Management expects Ebidta margin of around 15% to continue for the company, given strong order book and lower raw material prices. Further, reduction in contribution of GI pipes within overall sales composition also helps margins.
The company has about 10% market share in PVC business in Eastern region of India with a manufacturing capacity of about 10000 TPA. It's a strong player in Eastern region in rural agricultural water transmission pipes and urban plumbing segments.
In order to go PAN India, the company has put up a 10000 TPA plant at Gujarat in April'15 and it further plans to put up plants at Secundarabad, Guwahati and Hyderabad in FY'16. These plants are on lease model basis and hence land acquisition costs; clearances etc are not an issue. Total capex planned for all these expansions is about Rs 40 crore, which will result in total capacity of 40000 TPA by end of FY'16.
Overall, the company aims to reach net sales of around Rs 1900 crore by FY'17 with higher margins.
Powered by Capital Market - Live News