ITD Cementation: Industrial segment to contribute heavily going ahead

Riken Mehta
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ITD Cementation, a diversified construction player reported consolidated net profit of Rs 4.61 crore compared to Rs 6.40 crore, a year ago.  Sales were flat in this quarter at Rs 405.15 crore.

The company’s management believes it has a healthy order book and the contraction in piling and foundation work flow is a temporary phenomenon. Here is an edited transcript of the response to the questionnaire sent by moneycontrol.com

Q. What is the total order book at the end of June quarter and how much of it will be executed in FY14? Are you experiencing any delay in execution or cancellation of orders from your clients in wake of slowdown?

A. Our order book stands at Rs 3348 crore. This represents about 2 years’ of forward work. We do have some orders where the payments are slow or where the client is stuck for further funding related issues. But the value of these orders in our overall work-in-hand is not significant.

Q. Revenue growth was flat while operating margins contracted by 64 basis points. Can you elaborate more on your quarterly performance?

A. It is not always possible to make a Q-on-Q comparison of company’s performance in the construction sector. But, having said that, margins are not even across all customer segments from where the work emanates. Our work flows from developers of ports, MRT projects, dams & tunnels, highways & flyovers and piling & foundation engineering work and margins between quarters can vary with the relative contribution of these in the overall revenue.

Q. Can you give us the full year sales, profit and margin guidance for FY14?

A. We do not have a policy to issue guidance on earnings. But, barring unforeseen circumstances, we should be able to improve our last year performance.

Q. Interest cost has gone up. What is the total outstanding loan book?

A. Our loans are mainly working capital loans, which are slightly higher than the last year level.

Q. Last year the company forayed into industrial and power segment. How is the demand scenario in this division considering slowdown? What kind of revenues do you expect from this division in next 2 years?

A. Yes we have started to focus on the industrial segment, comprising of buildings across all users. Selectively, investment is happening in the industrial segment and we expect this segment to be a significant growth driver in the coming years.

Q. How is your foundation and piling division performing? What is your outlook for this division going ahead?

A. With the slowdown in power and real estate, there is a contraction in piling and foundation work flow. We hope this is a temporary phenomenon. 

Q. How is the demand outlook from the shipping and ports division (Maritime structures)?

A. The marine division continues to be a major contributor to work flow and revenues. Yes, there are some delays in awards due to client related issues and receipt of clearances.