KEC International has recently received orders from Power Grid and MSEB. It has also received orders from West Asia worth INR 400 crore. The company also won a further INR 132 crore in orders from Maharashtra State Electricity Distribution Company.
In an interview with CNBC-TV18, Mr Ramesh Chandak, MD of KEC International spoke about the company's order pipeline and the cables business.
Q - Take us through the order book at this point in time, how much has it expanded it from say six months ago levels?
A - The order book currently is about INR 5,500 crore which is after up to date execution. Earlier also our order levels were around INR 5,500 crore. So, our order intake is currently matching with the execution cycle. We expect a lot many orders in the pipeline in the next four weeks. Currently, this order which we have received from Maharashtra is a rural electrification order, which is to do rural electrification closer to the Kalyan area. This order is worth about INR 132 crore which is to be executed over a period of 18 months time.
Q - What kind of margins are you expecting to make in the next six months?
A - As I have always maintained, margins between 10% to 11% can be expected on a long-term basis and maybe occasionally it could be a little more. But on a longer term sustainable basis, I would still say margins between 10% to 11% are likely.
Q - When would the orders start trickling into the revenues as well?
A - Typically once we get the orders, the first three four goes into augmentation, planning and getting the designs approved. Normally for about 3 months to 4 months time, the revenue starts coming in and the peak is always after 8 months to 9 months and again in the last three months the revenue is less because only the completion thing is going on.
Q - How is the Middle Eastern Market shaping up?
A - The market has picked up pretty well and now crude prices have stabilized at USD 70 per barrel plus and in most of the Middle East we are targeting a price of USD 65 per barrel to USD 70 per barrel. So all their infrastructure plans are on and all the tenders, which were held up for some point of time are now in the pipeline. So we are seeing a lot of activity in the Middle East happening currently.
Q - What are the tenders you've received from Power Grid?
A - We received Power Grid some time ago, not very recently. But there are orders in the pipeline. Power Grid typically has the maximum tender flow in the last quarter of the year. That has been their practice.
Q - Can you put a number to it? What kind of increased orders are you expecting by December 31 and more importantly by March 31?
A - The order book would be much higher than INR 6,000 crore at the end of March.
(Sourced from CNBC-TV18)
