KEC Intl: Order Intake Sees 50% growth YoY | NDTV Profit
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00:00Welcome, this is MarketIQ, I am Agam Vakil and with me is Anushi Vakharia.
00:12Well, we are now in conversation with Vimal Kejriwal, he is the Managing Director and
00:18CEO at KC International.
00:20Mr. Kejriwal, good afternoon, thanks for taking the time out.
00:23Well, it does seem like KC International is going from strength to strength when it comes
00:27to securing orders.
00:28Of course, we have yet another month and this time around, you've reported an order inflows
00:33of worth around a thousand odd crores, a little over that.
00:36Mr. Kejriwal, you know, at the end of FY24, your overall order book stood at a little
00:41over 29,600 crores.
00:44Where does it stand now and how much of that can we expect to be executed in FY25 going
00:50in?
00:51Good afternoon, Agam and thanks for having me.
00:55Our order book is virtually at the same level because, you know, we had our quarterly execution
01:00also coming in, in a way, but I'll say my L1s are now around 8,000.
01:06So if you look at that way, we are 30 plus 8, around 38,000 would be broadly the order
01:11book plus L1.
01:14And as far as execution is concerned, what we have said is that we did around 20,000
01:19crores last year and we should have a growth of around 15%.
01:23So we should be executing around 23,000 crores of this order book.
01:28Right.
01:29Right, Mr. Kejriwal, Anushi joining in.
01:32Now you've mentioned about the execution period, but now you had a handful of new orders in
01:37this last couple of months.
01:39I want to understand the kind of margin profile they have, considering you're aiming for higher
01:43margin 7.5% in FY25 and growing beyond that in FY26.
01:49So typically the margin profile will be from 8 to 10% or so, broadly, that's the way the
01:56margin profile works.
01:58And when we have said 7.5 and growing is because obviously we have older orders, which are
02:02a lower margin, then those will get executed, hopefully in Q1 and Q2.
02:06And after that, the margins will start, you know, increasing and reflecting in our books.
02:13Mr. Kejriwal, has there been any hampering or a pause in order awarding in the first
02:20quarter and that, of course, largely on account of perhaps the general elections?
02:25That's the first question.
02:26And secondly, if that is the case, do you think that the order of awarding activity
02:31could pick up substantially in Q2 and Q3?
02:35So I think the answer is probably yes in that way.
02:39That's why you're seeing that we have released three order announcements in succession that
02:43way.
02:44Because once the elections are over and all that, the public sector clients have started
02:48having their board meetings and approving orders.
02:51Also, there were quite a few tenders which had been quoted, which have not been opened,
02:55which are now getting opened.
02:56And their award will take a couple of months.
02:58So some of those awards will come in Q3.
03:01But in Q2, a large part of the L1 will get converted into an orders.
03:07Now that all the issues or hindrances are over, we do expect that we will have a good
03:13Q2.
03:14Right.
03:15Mr. Kejriwal, now, if you had to get a breakdown of these orders, you've given a strong outlook
03:21on the T&E, that's the transmission distribution side, a large pipeline also that was outlined
03:2760,000 crore of a pipeline.
03:28I want to understand the kind of competitive intensity that we see in this kind of a pipeline
03:33that you see.
03:34And you've mentioned that the demand format being stronger in the next three to four years.
03:38So can you just give us an outline on how is this looking forward?
03:44So Anushree, I will divide it into a couple of parts.
03:46One is the India piece, which is looking the strongest.
03:49Then there is an international piece, which is the EPC part, largely, I would say, the
03:54market is driven by Middle East, which was earlier Saudi.
03:58But of late, we are seeing a lot of work coming out of UAE.
04:01And the third piece is the Americas, where we basically do supply of power as hardware.
04:06So clearly, if you look at India, I think we are very clear that next three, four years
04:10or maybe even longer than that, with the way the government has been talking about adding
04:15renewable capacity, then the shortage of power, and then even today, we saw some statement
04:19from the Secretary Minister of Power that they are reassessing the annual growth rate
04:23and so forth, what power requirement.
04:26So I think on the back of that, and on the back of the strong focus on renewables and
04:32green hydrogen, clearly, the TNT network will continue to be stringent significantly.
04:37I think three, four years, we don't see any issue in or any let up in the demand.
04:44As far as the Middle East is concerned, the large focus for the class, I think two years
04:48had been on Saudi.
04:50But now we are seeing that the focus is also shifting to other countries.
04:53So Saudi is growing, UAE started growing a lot.
04:56But to me, that piece also looks like it is doing reasonably well for us.
05:02The third piece for us has been Americas, where Brazil now is doing very well.
05:06So we do expect Brazil to do well.
05:10And North America, especially the United States on the back of the IRA Act and the Build Back
05:14Better etc.
05:15We are seeing a lot of project inquiries coming in where we are doing supplies.
05:19So we expect the US market and the South America market to grow significantly.
05:23But to me, I think TNT, next three, four years, we are seeing a robust demand continuing across
05:29our markets.
05:30Absolutely.
05:31So on one side, the TNT demand continues to remain strong.
05:35But I also want to focus on the railway side.
05:38Now railway has, we have seen a degrowth over here and even considering the order intake
05:43that we have, you outlined that there is a chance of a further degrowth for next financial
05:48year as well.
05:49But still your commentary overall on this piece remains positive.
05:52I want to understand what's the outlook on the railway side.
05:56Your focus was more towards the infrabuild side.
05:59So can you expand more on that?
06:02I think the expectation is that pre-election, a lot of focus was towards the passenger amenities
06:09etc.
06:10So running of new trains, station building, rebuilding of stations and a lot of other
06:14related stuff where the government focus was there.
06:18And I think post the election now, we are clearly seeing signals that the government
06:23will now focus on building the infrastructure.
06:26You're running a Vande Bhara train at 80 kilometers, 70 kilometers, 90 kilometers, you need to
06:30run it at 160.
06:31And that was the whole idea.
06:32So there will have to be a lot of infrabuild and we expect that now with elections behind
06:37us, government will be more on infrabuild than let's put it on the populist side.
06:42So I think that's where our entire this is coming.
06:46The second piece was that a lot of road contractors etc. had come in and the competitive intensity
06:52had increased significantly in railways.
06:54We now expect that again with the focus of government on Gati Shakti and on highway build
07:00etc.
07:01Many of the contractors who had come into railways would go back into the road.
07:05So we do expect that the competitive scenario would also improve, which is why I think we
07:10are pretty positive on the railways going forward.
07:14Mr. Kejriwal, our final question then, and this is to do with your aluminium conductors
07:20manufacturing line.
07:21So can you give us further updates on how things are panning here, the kind of capital
07:26expenditure that you have allocated towards this and some timelines?
07:30So the capital expenditure which we had allocated was around 60 crores.
07:35We expect that this will generate a revenue of around 600 crores.
07:39And it should be completed by around September, October.
07:43So I think Q3, we will have a product coming out full scale from that product.
07:49But I think as an intermediate part, we may have some production coming out maybe in Q2
07:54itself.
07:55But the full production will start in Q3.
07:57All right, Mr. Kejriwal, we leave it at that.
07:59Thank you so much for joining us and taking us through what we can expect from KEC International
08:03going forward.
08:04Thanks so much.
08:06And with that, we have also reached the end of this edition of MarketIQ.
08:10I lost my line up on the other side.
08:11Keep watching NDTV Profit.