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00:00Hello and welcome, you are watching The Smid Show here on NDTV Prophet.
00:16I am Harsh Saita, with me is Anushi Vakaria and we are going to speak with the first management.
00:21We have Sanghvi Movers here.
00:24We have Mr. Rishi Sanghvi who is going to talk to us about a whole host of factors playing
00:29out for Sanghvi Movers.
00:31Welcome Mr. Sanghvi.
00:32First off, I want to understand, you are doing, you are splitting your business up of course
00:37into your own subsidiaries, you are not planning to list it separately but talk to us about
00:42the rationale behind that, this business restructuring that you are doing.
00:48Hi good morning and thanks for having me Bhavik.
00:51So Sanghvi Movers Limited which is the listed entity is the first train rental company in
00:59India and the fourth largest in the world.
01:02So we are a three decades old business and we have started offering value-added services
01:07to our renewable customers as well as our hydrocarbon customers.
01:12Now those businesses have gotten to a certain size and scale where we see a lot of value
01:17creation that we can do for our customers.
01:21Specifically in the renewables we are providing turnkey solutions from conceptualization to
01:30commission and therefore we have hived out our capabilities into a 100% fully owned subsidiary.
01:37Sanghvi in future renewables and in future we will continue to build our capabilities
01:45within that company and deliver turnkey services to the renewable space.
01:51Mr. Sanghvi hi, Anushri joining in here, I wanted to understand more on the turnkey business
01:58that you have mentioned, you have earlier said that there are a shortage of players
02:02in this wind turnkey solutions that we are looking at, want to understand the competitive
02:07landscape on this and also want to see is there a possibility of a separate listing
02:11for these two companies, these two new subsidiaries that we have made in the future?
02:15Right, hi Anushri.
02:19So the competitive landscape in the EPC or turnkey services space in the renewables sector
02:29is quite competitive because the renewables sector is on fire and it is you know trending
02:36currently and it's a flavor of the next decade.
02:40However, there are very few organized, listed, well-governed companies who can deliver projects
02:49on time and within cost and for these independent power producers mainly who are pension fund
02:56back, who are private equity back or who are foreign utilities or Indian listed entities,
03:03it is very hard for these large players to work with unorganized service providers.
03:09So while the space is large and there are a number of customers, there is a lot of value
03:13differentiation that can take place and that's why we believe we have an edge and we are
03:20delivering services under Sangreen Future Renewables.
03:25You know with plans to list the companies, right now we are focused on delivering value
03:31to our customers, aiding the country in its clean and green energy transition and if there
03:38is a value play or a proposition to deliver further value to our shareholders, then we
03:44may list the companies in the future.
03:47Alright, let me switch focus, let me come to the Q1 numbers and talk us also through
03:55what we can expect for H1 or the rest of the year if you can.
04:00So Q1 was a slightly softer quarter, give us the perspective as to why that is so?
04:09You know there is a couple of things that are happening in the economy, first off there
04:14was a general election, so there was a slowdown, both public sector capex and private capex
04:20took a hit in the first quarter, in fact Q1 had a lower GDP growth rate as was expected.
04:30Second is that there has been an early onset of monsoons in the country which has slowed
04:35the project execution and offtake onset.
04:39So we see this situation continuing, especially the slowdown due to monsoons in the second
04:45quarter, but looking forward we believe that the second half of the financial year is where
04:51the demand for cranes is going to pick up and we see all sectors, wind, steel, cement,
04:59hydrocarbons, petrochemicals, metros, railways, bridges, all of these sectors will pick up
05:04in the second half of the year.
05:07Mr. Sanghvi, I'll come to the key operational metrics over here, so as you said that Q2
05:12is expected to be softer, now this is on the, one of the key reasons is also the capacity
05:17utilizations which will continue to fall from the 77% which is lower than the 80% mark and
05:24this will go below the 75% mark as well and as a result of this even the average blended
05:29yield will see a decline over here.
05:32I wanted to understand what would be the perspective on this post the Q2 for the second half, what
05:38can these numbers look like, will they go back to the 80% plus range?
05:43So yes, we expect the demand for cranes in the second half of the financial year to not
05:48only push up the utilization in and around 80% but to also we expect to maintain an average
05:54blended yield of 2% through the financial year.
05:57All right, and Mr. Sanghvi, Q2, you expect a bounce back because your Q1 commentary seemed
06:06to suggest that Q2 will be softer.
06:08Yes, no, we expect the monsoon situation which has slowed down the project offtake at site
06:14will definitely continue through Q2 and as I have already mentioned we expect the second
06:20half of the financial year to look much better.
06:23Understood, understood.
06:24So Mr. Sanghvi, what are the revenue projections for the FY25 period as we speak, are you still
06:31on track to meet the 952,000 crore of the revenue guidance and also give us an outlook
06:36on what the blended margins will continue to look like as we move forward?
06:41Right, so we have already surpassed our order booking today, stands at around 750 crores
06:50and we still have a balance 7 months to build out that order book which will primarily come
06:56in the second half of the financial year where we expect demand to look much better for cranes
07:03due to all the different sectors firing and project executions speeding up in the second
07:11half of the year.
07:12Sorry, go ahead.
07:15Yes, please continue.
07:18We believe that our order book today at 750 crores split between our core business and
07:27our APBC business where 330 crores is from the APBC business.
07:31We expect to maintain the same blended average EBITDA which we have given a guidance of around
07:3850%.
07:40Mr. Sanghvi, you mentioned that the APBC business consists of about 330 crores of an order but
07:45if we exclude this and come back to the crane order book, now that has been on a declining
07:51trend.
07:52Want to understand your perspective, if we take this period into account and compare
07:58it with the previous year, why are we seeing a decline in these orders and what is the
08:03kind of order pipeline that we are looking at, the inquiry pipeline that we should be
08:06looking forward?
08:07Sure.
08:08So, yes, there is an order decline because of two primary reasons which has been mentioned
08:14which is the general election where there was a slowdown on government spend but also
08:19private capex took a hit and for the first quarter, the GDP is lower than expected.
08:25The second issue is, of course, the early onset of monsoon, it was better than predicted
08:30and that has resulted in twin issues with respect to the project offtake and the slowdown
08:36in execution on the ground.
08:39We believe this to improve in the second half of the financial year and therefore, we believe
08:45that our capacity utilization will cross 80% in the second half of the year.
08:52And overall capacity utilization will be 80% plus for the full financial year?
08:57Thereabouts, between 77 to 80%.
09:01Sure.
09:02So, it will normalize is what you are suggesting despite Q1 being slightly softer due to elections
09:06versus last year?
09:08Yes.
09:09Okay.
09:10I want to try and also understand the revenue breakup as you go about.
09:15So, talk to us about full year FY25 top line, where do you expect, you have suggested 950
09:22to 1000 crore, how will that evolve in terms of product mix or service mix, win DPC, project
09:29DPC, how should one look at it, how should one view it?
09:34Yeah, so, you are asking for a forward guidance which is something difficult for me to give.
09:39I understand.
09:40What I will say is that, you know, our order book has settled at 750 crores which is deliverable
09:47in this financial year.
09:49We have seven months left to build the order book and I believe it's in during the peak
09:55demand for cranes which is in the second half of the financial year.
09:59We do see our capacity utilizations increasing.
10:03You know, there is tremendous order visibility or inquiry pipeline.
10:10On the wind energy sector, there's more than 10 gigawatts of inquiries that we are having
10:15right now.
10:16Not all of it is deliverable in this financial year but all independent power producers are
10:23in touch with us and the scale of the inquiries is vast, it's more than 10 gigawatts.
10:29So, all the power, cement, steel, petrochemicals, hydrocarbons, civil infrastructure projects
10:36that are being built around the country are all contributing to a very healthy inquiry
10:41pipeline.
10:42And I think going forward, we are well poised to capitalize on that inquiry pipeline and
10:47build up our order book in the last seven months.
10:50Understood.
10:51And with regard to project DPC, how will that start contributing to top line, if you can
10:55just give us some visibility there?
10:57Right.
10:58So, we are still in our nascent stage.
11:00So, this year we are looking at closing the project DPC order book between 75 to 100 crores.
11:06Some of it may be spilled over into the next year but this is what we are talking about
11:10in terms of order wins, not order deliveries.
11:14Mr. Sanghvi, you've mentioned that you have a strong order pipeline in place for the EPC
11:19business.
11:20Will that explain the 50% growth that you're seeing for the new businesses or there are
11:25other factors in play as well?
11:27And also, what would be the two to three year outlook like post this FY25, what should be
11:31the near term scenario that we should look for the growth potential of these new businesses?
11:36Right.
11:37So, yes, you're absolutely right.
11:39You know, every single independent power producer in the renewable space has a gigawatt ambition
11:45per year and everyone is looking to build out a five gigawatt platform.
11:50And so, this has created a massive amount of excitement both in the wind and solar space.
11:57So, the inquiry pipeline that we are seeing from the independent power producers in the
12:02renewable space will definitely feed into our businesses and we expect the business
12:08to deliver 50% growth this year and next year also looks positive based on the inquiry pipeline
12:16we have.
12:17Now, you know, as we build our business, we are developing a track record and a reputation
12:22of delivery.
12:23We're one of the very few EPC players in the country that are well run, positioned, governed
12:29and are delivering projects on time and within cost.
12:33So, our track record will enable us to capitalize on more opportunities going forward and we
12:39definitely see this as a forward momentum that will drive this growth in our EPC business.
12:44All right.
12:45Thank you so much, Mr. Sanghvi.
12:46Yes, all the time we have.
12:47But thank you so much.
12:48It's been a good chat.
12:49Thank you for coming in and breaking this down for us.