• 2 months ago
Transcript
00:00J&K India, the company listed back in April and since then, has shown strong growth.
00:07The company primarily generates revenue from sale of fired heaters and related products
00:11and recorded a revenue jump of nearly 140% in Q1.
00:15My colleague Anushi spoke to Arvind Kamath, who is the chairman and whole-time director
00:20at J&K India, and Praveen Sathe, who is the chief financial officer at J&K India, about
00:25what has been driving this growth.
00:27Listen in.
00:29Praveen, a fantastic Q1 and H1 for us in this year, I mean we got listed in the Q1 and actually
00:35the listing and the proceedings from the primary objects really helped us a lot in getting
00:41the larger contracts which we expected.
00:44So the order inflow for this till end of August has been almost 900 crores and our order backlog
00:52as you said which was around 26-28 crores in the end of March has moved to around 1450
00:59crores in the end of August.
01:02So that gives us a very good visibility for this year, not only growth in this year, also
01:07in the next year.
01:08Also the sectors as you know, the petrochemical and refining sector is doing quite well now
01:14and we also have a good visibility in terms of the big pipeline for next 3-4 years.
01:20Alright, that's fair to understand.
01:22Mr. Sathe, coming to you now, you have raised about 300 crores through the primary market.
01:26I want to understand what's the update, have you started deploying the funds, are you seeing
01:31an improvement in the working capital as we speak?
01:34Yes, the basic purpose of the IPO was to cater to the working capital.
01:41So we have deployed the funds in the working capital and few of the funds are parked as
01:46deposits which are towards the margin money for the bank guarantee requirements that we have.
01:53Okay, and Mr. Sathe, staying with you for the next question on the margin profile, I
01:58want to understand, now if you look at Q1, there was a kind of hit that we looked at
02:02in the margin terms, 21% of margins, that had skidded down to about 11%, wanted to understand
02:09if there was any one-off that we had seen in the quarter and going forward, you maintain
02:14the 18% of the EBITDA range that you have historically maintained over the years?
02:19Yeah, definitely, we have given a guidance of 18% of EBITDA to the market since the beginning
02:27and it has been consistently maintained for last 3-4 years.
02:32Now, if we analyze quarter on quarter, the margins may vary but on year-to-year basis
02:40we see definitely there would be an improvement but we can give minimum guidance of 18% of EBITDA and 11% of PAP.
02:50Okay, so 18% of a guidance that we should continue to look forward for the business as we go forward.
02:57Mr. Kamath, coming to you, you have some strong diversification plans for the business, now
03:02the core remains on the heating equipment but you are also furrowing into another space
03:08and this pertains to flares and incinerators along with renewable energy as we speak.
03:13I want to understand from you, what are the key growth drivers for which you are making
03:18this sort of a diversification and what is the plan ahead for these two segments?
03:24Yeah, thank you Arushi for asking this question, that's a very relevant question for us because
03:29not only heating equipment which has been our core business for last few years but we
03:34spore into waste gas handling and as we speak in the first quarter we have received two
03:41orders from IUCN for the waste gas handling project itself which is a very prestigious
03:47and very important for us in this financial year which we could get into because we build
03:53our capability and expertise in this segment and also in the heating equipment segment
04:00I would like to mention that the Reliance order which we have received is for a cracking
04:04furnace which is the kind of a first large contract on J&K India directly for the cracking
04:10furnace opportunities because there are many petrochemical projects are announced in India
04:16so most of the petrochemical projects would have cracking furnaces as a part of the cracking
04:21plant which is coming up and as far as the renewable segment is concerned, we just heard
04:27that it is going a bit slow but we have voted for we have in big pipeline few of the opportunities
04:33and as the segment grows we are confident that we will be also getting some orders in
04:39the renewable segment as well.
04:41As on now we are trying to build the expertise and experience on the renewable segment.
04:47Mr. Kamath, you mentioned about the Reliance order and securing orders from IOCL also,
04:54I want to understand the timeline of these two orders, when should these be executed
05:00by and also on your overall order book also that you have mentioned the 1400 crore even
05:05on a historic basis what is the kind of execution timeline that the company sees for its order
05:10book?
05:11Yeah, generally the execution period for most of our contracts varies from around 1 year
05:18to 2 years.
05:20So, like the IOCL order which is for incinerators that is around 1 year execution period and
05:25Reliance which is a large contract for cracking furnace which is about 21 to 22 months execution
05:31period.
05:32So, that is the kind of execution period which we have, most of the contracts ranges from
05:361 to 2 years.
05:37Okay, so 1 to 2 years is the contract range that you have for your overall order book.
05:42Now, coming to the mix of the segments that you have mentioned and are diversifying into,
05:47if you look at the order book mix 5 percent was what it made for the flares and incinerators,
05:54what is the type of mix in the next 3 to 4 years that we plan to have, where do we see,
05:59what is the kind of revenue mix that we plan to generate from the two segments that you
06:04are expanding into?
06:05Basically, as far as the waste gas handling segment is concerned, currently in the order
06:121.4 it is about 12 percent is the waste gas handling segment.
06:15So, you know we are expecting it to be anywhere between 10 to 15 percent of our total order
06:21book would be the waste gas handling and as far as the renewable segment is concerned
06:26that could be around say 5 percent in terms of the order book this year, but going ahead
06:31we plan to build up around 10 percent of our total revenues in next 2 to 3 years.
06:36All right, 10 to 15 from the waste gas handling and the other around 10 percent that we are
06:41seeing going forward.
06:42Coming to the margins, I want to understand from you Mr. Sathe, now 18 percent of our
06:47guidance that you have given, do we expect any kind of shift with these two segments
06:52gaining more traction, their contribution increasing going forward, what are the type
06:56of margins if you want to break it segment in a segment compared to your heating equipment?
07:03Yeah, see the margin profile is different for different projects, but on an average
07:11if you see we make up that 18 percent.
07:15So, few projects where we have to statistically get an entry or we are related with you, there
07:22the margin profile would be a little on the lesser side, but few projects we may make
07:27margins of 23, 24 percent also.
07:30So, on an average if you see even if we enter into these new segments, we are confident
07:36that we will be maintaining the EBITDA level of 18 percent.
07:40Okay, so 18 percent EBITDA level stays for future as well.
07:44Now, coming to the order bidding opportunity that you have mentioned in your previous conference
07:49call that stood at about 4000 crore and this is with a success ratio of about 20 to 25
07:54percent.
07:55Mr. Kamath, I want to come to you on this one, where do we see more of these orders
07:59coming in from and also if you can break it down on a geographic basis, in which geographies
08:05are we seeing more orders internationally?
08:08Yeah, I mean the EBIT pipeline is still around that figure what we mentioned earlier.
08:14So, we had an order inflow of around 900 crores till end of August, Anushi.
08:19In terms of the, you know, the geography, there is about 50 percent from the India because
08:25India still has a lot of opportunities in these sectors and balance 20 percent is from
08:31the export opportunities where it is mainly Middle East, Africa and Eastern Europe countries.
08:38Okay, and going forward, what is the kind of mix that we want to maintain in terms of
08:43geographies?
08:44It depends on the, you know, it depends on the type of opportunities because we cautiously
08:50and saw that we did a good opportunity which is technically more better for us to build
08:55the expertise and also commercially better in terms of the payment terms, cash flows
08:59and things like that.
09:00So, that's how, you know, difficult to exactly say the mix what we would have.
09:05Historically, we had a mix of about 50-60 percent exports and about 40 percent domestic.
09:10But going ahead, it could be around 50-50 on their balance.
09:15All right, that's fair.
09:16So, 50-50 mix that we should be looking out for.
09:18Mr. Satya, my final question to you.
09:20So, on a three-year basis, if you were to look at your CAPEX plans, can you highlight
09:24what are your CAPEX plans currently and what do you expect them to be in future?
09:29We don't have major CAPEX plans in the next three years or so because we have our manufacturing
09:37facility at Madras in SCZ.
09:41There would be little bit expenses to modernize and to enhance our modularization capabilities.
09:49But they would be not to a large extent.
09:53So, at least for the next three years, we don't see much CAPEX.
09:57Okay.
09:58So, no major CAPEX requirements in our three-year perspective.
10:01Well, that was my final question.
10:03Thank you, Mr. Kamath.
10:04Thank you, Mr. Satya for joining into NTTB Profit and sharing your outlook on the company's
10:09prospects forward.
10:11Thank you so much.
10:13Well, that was the management of J&K India talking to us extensively about what the outlook
10:19for the company is.
10:20But with that, it's a wrap on this morning with CAP show.
10:23But keep watching NTTB Profit more on the other side.

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