TD Power System's total order book, as of December 2013, stood at Rs 835 crore. The order book for the manufacturing division was around Rs 300 crore.
The ground reality is that for companies like ours who are dependent on capex in India, nothing is happening.
Nikhil Kumar
MD
TD Power Systems
TD Power System's total order book, as of December 2013, stood at Rs 835 crore. The order book for the manufacturing division was around Rs 300 crore, of which 50 percent came from exports, and the EPC division stood at Rs 500 crore, which was all domestic.
The company sees manufacturing exports, which is growing in excess of 20 percent CAGR (compounded annual growth rate), to be the growth driver in FY15.
The company's maximum profits, around 80 percent, come from the manufacturing and products group and the rest from EPC category. Thus, even if it writes off some EPC orders, that will not have a big impact on the margins, Kumar told CNBC-TV18's Latha Venaktesh and Ekta Batra.
TD Power said it has seen a marked improvement in Q4FY14 invoicing. Though Kumar believes that December quarter (Q3FY14) was the bottom, he feels the margins may continue to remain sluggish.
Kumar's wishlist from the new government includes a cut in interest rates and removal of retro amendments. He wants the government to remain focussed on industrial growth.
Below is the transcript of Nikhil Kumar's interview to CNBC-TV18's Latha Venkatesh and Ekta Batra
Latha: A lot of your peer companies have indicated that the domestic ordering activity has almost come to a standstill. What is your sense, how is it at your company?
A: I totally agree with that assessment that the ordering activity in India has completely come to a standstill. We too do not see any customers calling us for negotiations, we don\\'t see many live enquiries at all, we hardly see any activity on the ordering side. So we are also seeing a reflection of that in the Index of Industrial Production (IIP) numbers, we have seen the IIP numbers shrinking last quarter minus 1.8 percent. So the ground reality is that while the stock markets are probably factoring a majority government win, the ground reality is that for companies like ours who are dependent on capex in India, nothing is happening.
Latha: What is your total order book looking at and if you can split it up in terms of the manufacturing order book and the EPC business order book?
A: The total pending order book of the company as of December 31 because that is the quarter I can actually report was Rs 835 crore. And in our manufacturing division it was about Rs 300 crore and about 50 percent of that were exports. So the other Rs 500 crore was basically from my EPC division which is all domestic. But the manufacturing exports are growing CAGR and in excess of 20 percent per year and that is going to be the growth driver for us in this financial year FY15 too. We see much lower offtake coming on the domestic side both for our products group as well as for our EPC group, significantly lower demand taking place on the domestic side.
Ekta: Some of your peers including Bharat Heavy Electricals (BHEL) and Larsen and Toubro (L&T) have spoken about write-offs in their order book. Given the pressures is that a possibility for your company as well?
A: In the last earnings call that I had with all the analysts I had talked about possible order write-offs in the EPC group. We don't have a problem at all in our manufacturing product division but we might have a problem on that front on the EPC side. We still haven\\'t come to that stage where we are actually writing off some business but I cannot say it is not going to happen because there is one order that is currently under negotiation which might end up getting cancelled. If that happens then yes we will face that situation of an order cancellation from the order book. But it is a reality of the market place today, one cannot runaway from it, it is better to be upfront and talk about it openly and tell your investors exactly what is happening.
TD Power System stock price
On April 22, 2014, at 13:58 hrs TD Power Systems was quoting at Rs 283.50, down Rs 9.5, or 3.24 percent. The 52-week high of the share was Rs 316.00 and the 52-week low was Rs 175.40.
The company's trailing 12-month (TTM) EPS was at Rs 9.15 per share as per the quarter ended December 2013. The stock's price-to-earnings (P/E) ratio was 30.98. The latest book value of the company is Rs 138.82 per share. At current value, the price-to-book value of the company is 2.04.
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