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00:00 Hello and welcome to NDTV Profit. One stock that is under pressure today is Viatek Vabag.
00:12 The company came out with its Q4 results yesterday. The revenue was about 0.8% up while the EBITDA
00:17 was about 6.5% up. Margins though have improved to 12.4% compared to 11.7% in this quarter.
00:25 And to discuss more we have the Chief Managing Director, Mr. Rajiv Mittal joining us. Hello
00:30 and welcome to the show Mr. Mittal.
00:32 Good morning Anushri and good morning to your viewers.
00:36 Alright, my first question to you is on one side we have seen an increase in our profit
00:41 margins but on the other side the revenue this quarter has remained flat while if we
00:45 look back to the previous few fiscals, the revenue has actually gone down. So with our
00:50 projection of about 15-20% growth in the coming period, what are the key growth levers that
00:55 we are looking at to improve the scope going forward?
00:58 Thank you and first I think you must know that as a company there are two things which
01:06 we should look at when we look at our revenue. One is the strategy which company has adopted
01:14 three years back saying that construction portion from our business we are steadily
01:20 going to reduce which is what we are doing every year and already 30% of our business
01:27 is gone purely EP because we are a pure play engineering company and technology company
01:34 and we only want to go for technology projects not so much of construction projects. And
01:39 construction used to be like pass through and it will only dip the margins. So we last
01:45 three years we are taking more projects which does not have a construction portion or has
01:50 a very small construction portion that's number one reason. Number two reason is the divestment
01:57 we have done last year of two of our subsidiaries in Europe because they were not growing and
02:04 it was just flat basically Switzerland and Czech Republic and which revenues were there
02:11 last year and this year these revenue numbers are not there. This is the reason you are
02:16 seeing a flat top line actually it's not flat we have grown but you don't see that in the
02:24 numbers reported.
02:25 All right so shift in the technology side we are looking at compared to construction
02:30 but now my second question is on the order book. The order book stands at about 11,400
02:35 crore. Want to understand from you how much are we planning to execute it this year and
02:40 can you also give us a breakup between the EPC and OM projects for the execution in the
02:45 orders that we look.
02:47 Good. See 11,500 crores if you go by our past history we would typically execute about 30
02:58 odd percent to 35 percent so that is what we will execute about more than 50 percent
03:08 I think is our O&M here and 50 percent is our EPC projects. The order book which we
03:17 have will give us easy visibility of next three years number so it also gives us a predictability
03:25 and visibility of the numbers for the next three years.
03:29 So I'll stick to this I want to also understand now that we have a strong order book in place
03:34 what is the kind of order inflow growth that we are looking at for this fiscal year considering
03:40 there might be some election impact that we can see in the first half.
03:45 Yeah very true and that is exactly the reason we are Indian multinational we are very active
03:53 in Middle East geographies Africa, Southeast Asia and a part of CIS countries which is
04:02 basically the growing region for us. So that is the reason when the election came in and
04:09 the code of conduct came in last two quarters this quarter and last quarter we have shifted
04:16 more our resources into the other geographies and that's how we have seen a great transaction
04:23 happening and this is a traction happening in the Middle East and also in Africa and
04:31 we have submitted about 1 billion dollar bits in these two regions alone. So we are seeing
04:38 a very strong order pipeline as far as international is concerned. Now as the election is almost
04:45 out of the way we see from second quarter the decision making will start and the next
04:51 three quarters we will also see a good growth in the India region also.
04:57 Absolutely so you have mentioned that the Middle East is quite a strong outlook for
05:03 you but I also want to shift focus to the Russian markets you had some in the previous
05:08 few conference call you had mentioned strong growth prospects here in the terms of desalination
05:13 projects I want to understand what is the progress that is happening over there.
05:17 See you know we had a project almost two and a half three years back one of our largest
05:22 projects in oil and gas where we are doing a very unique technology projects again it's
05:28 a EP project and almost close to about 200 million dollar project. This project is substantially
05:37 complete the engineering is done procurement is done we are now delivering the equipments
05:44 which by H1 most of this deliveries would be completed and then it's the client spoke
05:52 to do the construction installation we will only give supervision so we expect in the
05:57 next four to five quarters this plant will also be erected and commissioning would start
06:03 but our substantial portion will be finished by H1 by September and we should finish this
06:10 project.
06:11 So by H1 it is but now I want to move on to the balance sheet side a bit so we have seen
06:18 the receivables have remained on the higher side when can we expect this to go down and
06:24 can you just share when can we expect this to go down and normalize going forward?
06:30 See if you are saying balance sheet you should see the balance sheet together with current
06:35 and non-current receivables if you see current and non-current receivables put together working
06:41 capital has not gone up.
06:43 Yes into the current receivable working capital has gone up and simple reason is we have received
06:50 some large projects in the in the last fiscal year which was 400 MLD desal plant in Chennai
06:59 we had a Bangladesh World Bank funded project the Chennai project is funded by JICA and
07:06 then we had a Mumbai CIDCO projects these all projects came in during the year and most
07:13 of the engineering works get done and towards the last quarter some of the supplies and
07:18 construction has happened because these are multilaterally funded projects this has to
07:24 go like in case of JICA it has to go to Japan, LC it takes time and normally over three to
07:30 four months cycle from us doing the work getting approval sending it to Japan sending it back
07:38 to India and getting the cash it takes about three to four months so our expectation is
07:44 you will see already in next quarter this receivables will start coming down and by
07:51 end of this financial year we will be back to our normal days of 80-90 days of working
07:58 capital.
07:59 Sure Mr. Mittal, now also I know that one of your key strategies is to remain asset
08:04 lights, asset lights I wanted to talk about the ham projects, ham assets that you have
08:08 the monetization side of it what is the progress on that front if I'm not wrong you had mentioned
08:14 that in one of the ham assets was to be monetized in this three in these three four months itself.
08:21 Very correct Arushi, we are asset light last 27 years in India we have remained asset light
08:32 and you will be happy to know we are celebrating our centenary year this is hundred years of
08:38 Waba is this year we are celebrating that and throughout this hundred years we have
08:44 remained asset light we never owned assets.
08:47 Now some of this Namami Ganga projects where ham has come in as a leader in water sector
08:54 we wanted to take part but good news is out of the four projects we had three are already
09:01 monetized and the fourth one should get done in next one or two quarters so we are right
09:08 to our strategy and happy to say our balance sheet will be one of the lightest in this
09:14 sector and it will remain so for future also.
09:19 Well that was the final question but before I let you go I just in one line can you outline
09:24 what is the strategy going forward?
09:27 See strategy and especially being a centenary year we want to give it back water business
09:35 is so satisfying because we are serving the people we quench the thirst of the people
09:42 and also we quench the economic thirst so we are both doing the human part where we
09:49 are supplying them water and take care of the environment on the other side water is
09:54 also fueling our economy by providing reliable affordable water to the industry we are ensuring
10:03 a good growth of GDP of the country.
10:07 Well thank you so much we look forward to future interactions with you and the results
10:12 coming forward thank you again once again for joining.
10:14 Bye.
10:15 [Music]