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00:00 Hello and welcome back to Earnings Edge. Now, we shift our focus to KEC International. The
00:12 company is in focus after it came out with its Q4 results yesterday. The revenue they
00:16 have reported about 11.6% of growth, while the margins did see a healthy uptick about
00:21 6% of margins compared to 5.1% earlier and net profit doubled to about Rs. 152 crore
00:27 compared to Rs. 72 crore. But to discuss more, we have with us the management in focus, Vimal
00:33 Kejriwal, the MD and CEO. Hello and welcome to the show, Mr. Kejriwal.
00:38 Good afternoon and thank you for having me.
00:40 Right. So, my first question to you is about the how are we looking at, how did we see
00:45 the Q4 FY24 and even the whole fiscal year shaping up? We saw healthy growth across all
00:50 our core segments except for the railway. So, what is it that we are looking forward?
00:56 First of all, if you look at an overall view, I think we were happy with our performance.
01:01 We had a record revenue, whether you take it Q4 or you take it for the year. It's the
01:06 highest ever we have recorded. Profitability has also improved significantly and you can
01:11 look at the numbers. So, EBITDA has gone up by 37%, PAT has gone up by 110%, both for
01:17 the quarter and for the year. So, whether you look at sequentially or year on year,
01:21 I think we have done a good performance. We would have loved to do a little bit more on
01:25 the margins. I think they are slightly lower than what we wanted to do. But overall, I
01:30 think it's a good number. Also, we have got a good order book plus L1 with us. So, when
01:35 you ask how do you look at it, I think next year we are again pretty positive about what
01:40 we should be able to achieve. Mr. Kejriwal, you mentioned that you would have expected
01:45 higher margins. Is this because of the railways which led to this margin crunch that we are
01:50 seeing? Along with this, there were even delayed collections that we have seen. What is your
01:53 outlook based on the railway segment going forward? So, on the margin front, let me just
01:59 answer that. There were two issues. One is obviously we had a little bit extra hit on
02:04 account of railways than what we had thought we will be. Secondly, around 400 to 500 crores
02:09 of our revenue got sort of deferred because of supply chain constraints, both in transmission
02:15 and in the civil on the DI pipes and a little bit on account of Red Sea issue. So, had that
02:19 400 to 500 crores come in at a much higher margin, then I think we would have been probably
02:25 closer to 6.5 or something as compared to 6.3, maybe around somewhere around that. Going
02:31 forward, clearly we have a nice order book and a decent margin level. So, in spite of
02:38 whatever may happen on railways, I think we are looking at improving the margins from
02:42 6.1 to 7.5 or so has been the way we talk about it.
02:49 10.5 is the outlook for next year. Now, again, you mentioned a lot about the order book 38,000
02:54 crore of order book over here. I just want to understand the typical execution period
02:59 that we see, especially for the transmission distribution, which is one of our core segment.
03:04 And in fact, can you also guide us towards the order intake that we are expecting for
03:08 FY25? So, FY25, we are looking at around 25,000
03:14 crores of order intake. So, that's as far as FY25 is concerned. If you look at the orders,
03:20 to me, the execution period varies from typically 12 months to 24 months. Transmission would
03:28 be roughly around 18 months or so. And when I say an order book of 30,000 plus 7,000 L1,
03:33 these are at various stages of execution. So, I think revenues will flow in regularly.
03:38 That's the way we are looking at it. And this order book would be enough for us for around
03:43 6 to 8 quarters of revenues. Right. So, 6 to 8 quarters. But if I want
03:50 to understand it correctly, the T&E orders, we have seen a healthy jump over a year. So,
03:57 do we see that this has a faster execution period? So, do we see this translating into
04:04 a better revenue growth also, if you can outline for the same?
04:08 So our target for this year was roughly around 20,000. We are very close to it, some 70,
04:13 80 crores less. Next year, we are looking at a revenue of around 15%. So, we are targeting
04:19 to achieve 23,000 crores. And largely, the growth will come in from the India T&E, as
04:25 well as from our civil business. That's the way we are looking at the growth coming forward.
04:32 And on this India T&E, I wanted to go much deeper into this. We saw about a 30 to 40%
04:38 of our growth. And even if you look at next year, about 25,000 crores of opportunity over
04:43 a year. Do we still see this sustaining forward in the near term or even in the medium term
04:48 as well? I think it will all depend upon how the government
04:53 continues with this renewable program. They have talked about having a 500 gigawatt of
04:58 renewable power. And if that target continues, which I believe that it will continue, then
05:05 a huge amount of T&E expenditure will have to be incurred. So I am very clear that this
05:11 number will only increase, not go down. All right. And now I want to shift your focus
05:17 to the conductors. We've made a foray over there. What is the kind of capex that we are
05:22 looking at and the growth opportunity that we are seeing coming from you?
05:27 So today we are spending around 60 crore rupees for setting up a full line. And if you look
05:33 at the numbers, we're talking about roughly around a 600 crore revenue from this 60 crores.
05:39 Now the full revenue may or may not get reflected in our top line because if we supply to our
05:44 internal T&E projects, then it will get knitted off. But overall, if I decide to supply completely
05:49 outside and there is enough market for it, then it can add 600 crores to our revenue.
05:54 If we supply internally, obviously it will help us in improving our profits.
05:58 All right. Now, even on the international front, a lot of opportunities over here, especially
06:04 in the UAE and the Saudi Arabia side where we are making a lot of de-bottlenecking efforts
06:08 also. I wanted to understand how are we aiming to increase our productivity over here and
06:13 what is it going forward as well from this area?
06:17 So if you look at our international operations, mainly as you rightly said, it's Middle East,
06:22 which is UAE and Saudi and also the United States of America, where we are supplying
06:27 a lot of towers from our factories in Mexico and in India. What we are doing on the de-bottlenecking
06:33 is we are increasing the capacity of our tower plant there from 20% of 50,000 to 60,000 tons
06:40 and that capacity should be operational within Q1. So I think that will help us in meeting
06:46 the increasing demand, especially in the UAE. UAE is coming up with a large number of projects
06:51 and since we are the only factory in the entire UAE for transmission towers, so clearly that
06:57 will help us a lot.
06:58 Mr. Kejriwal, before I let you go, my final question to you is about the private CAPEX,
07:04 the green shoots that we are seeing there. When you start to see this completely reflecting
07:08 in our orders as well as our revenues and again, this in contrast with the government
07:14 side wherein there is elections going on, how do these differ?
07:19 If you ask me, in the last six, eight months, we have started seeing inquiries and some
07:24 orders for private sector CAPEX. Otherwise, it was not there, to be very honest with you.
07:30 Last month, we announced one project. Before that, we had got another project. We now have
07:34 some more inquiries. So clearly, we have started seeing some discussions happening. People
07:39 are talking about it. My personal view is that even private CAPEX will wait for the
07:43 election results, decide location, which state, what to do and all. So I think post-elections,
07:48 we will… and then also look at the government policies. So my view is that post-elections,
07:53 even private CAPEX will start showing significant uptake.
07:57 All right. Thank you so much for joining in, Mr. Kejriwal, and sharing your outlook for
08:03 the next year going forward. Thank you so much.
08:06 Thank you for having me. Thanks a lot. Thank you. Bye.
08:08 Bye.
08:10 Bye.
08:11 (electronic music)