Conference Call      
          Kalpataru Power Transmission
Retains consolidated revenue growth guidance of 25% for FY12, but cuts standalone KPTL revenue guidance


Kalpataru Power Transmission (KPTL) held a conference call on Oct 24, 2011. In the conference call the company was represented by Pankaj Sachdeva, Managing Director, Manish Munot, Executive Director and Kamal Jain, CFO.

Key takeaways of the conference call

Revenue of KPTL standalone for the quarter stood lower by 9% to Rs 583.34 crore. EBITDA for the quarter stood at Rs 84.51 crore as compared to Rs 86.97 crore in the corresponding quarter of previous year. EBIDTA Margin & PAT Margin was 14.5% & 5.90% respectively for the quarter ended September 30, 2011. Revenue of KPTL for half year ended Sep 2011 stood lower by 2% to Rs 1167.92 crore.

JMC Projects (67% subsidiary) has registered a turnover growth of 60% (to Rs 426.32 crore) for the quarter and a net profit growth of 55% to Rs 8.35 crore.

Subham Logistics (subsidiary) - For Quarter ended Sep 2012 the company clocked a sales of Rs 48 crore compared to Rs 25 crore in corresponding previous period. EBITDA was Rs 3.5 core and EBIT of Rs 2.5 crore. For H1FY12 sales was Rs 73 crore compared to a sales of Rs 49 crore in corresponding previous period. The EBITDA stood at Rs 12.58 crore in H1FY12.

On consolidated basis the revenue of the company grew 11% largely driven by JMC as the revenue of KPTL degrew by 9%. The degrowth in revenue is largely on account of extended monsson and project delays.

Consolidated order book as on September 30, 2011 is above Rs 11000 crore. KPTL order book stood at Rs 6000 crore and that of JMC, a listed subsidiary company stood at Rs 5000 crore. Order intake of KPTL stood at Rs 650 crore and that of JMC was Rs 550 crore. Both Order book and Order intake does not inlcude any L1 orders.

Of KPTL order book, domestic orders constitute over 60% and international orders about 40%. Domestic T&D orders accounts for 49-50%, T&D international 38-40%, Railways & Infrastructure about 12-13%. Of the domestic orders about 45-50% is accounted for by PGCIL, private sector orders about 12-13% and balance is from SEBs. About 70% of KPTL order book is with variable costs.

Both JMC and KPTL together execute railway orders in excess of Rs 700 crore. If it is a civil contract/work that will be of JMC and if its electrification etc that will be part of KPTL .

KPTL – Given difficult/subdued H1FY12, the revenue growth of KPTL is expected to be slightly lower than the earlier expectation of 15% growth for FY12. But the growth will still be in double digit. On the other hand JMC expected to clock a topline growth of over 50% for FY12. On consolidated basis the company is confident of achieving a topline growth of 25% for current fiscal as guided earlier.

JMC Projects – at the start of the year given strong order booking in last fiscal wasexpected to achieve a growth of 40-50% for current fiscal and the company is on track of achieving that. Margin is expected to be around 8% at EBITDA level.

The COD date for BOT Transmission project may be later this quarter or early next quarter.

About 200 bps rise in interest rate in last 12 months. Borrowings stood at similar level. There was small impact on account of MTM forex losses for the quarter.

KPTL transmission order EBIT margin is 11.75% including other income.

Road BOT – revenue starts only in FY13-14. The company has completed FC for two projects and close to FC soon for the third one.

H2FY12 always accounts for 65% of revenue and order booking in last 10 years. Hence confident of achieving what is guided. Though current difficulties monsoon/ approval delays in H1FY12 impact visibility that will not have much of an impact in H@ but will force the company to grow at a rate slower than what it expected at the start of the year.

Algeria – overall outstanding are in the range of USD 30-35 mln which has to be delivered in next 4 quarters

Competitive Scenario have improved marginally with competition improving to healthy one now from unhealthy one some time earlier. Price levels have improved from low levels.

KPTL expects to end the fiscal with an order book of Rs 7000 crore. The company sees order to flow from PGCIL, SEBs as well as Overseas. On SEB front the company sees traction in order under pipeline/tendering in TN, Gujarat, Maharashtra and Chhatisgarh.

Customer advance as of now is Rs 400 crore compared to Rs 258 crore. Interest on customer advance is charged by some clients but that is very nominal.

Most of JMC's order intake for the quarter is largely from Factory & Building (FB) and Railways with each accounting about Rs 200 crore each. Of the JMC's total order book about 50% is accounted by FB, 20% power & rail 30% infra (road bridges and water)

On real estate front the Thane project will start generating revenue from Feb-March 2012. About 18-19 crore of rental revenue starting next year from thane project. The Indore project is in initial approval stage only.

Consolidated debt as end of Sep 2011 stood at Rs 1000 crore.

In Infrastructure (KPTL) the company expects a revenue growth of 20% and EBITDA margin of 10%.

Delay in projects is on account of RoW issues, clearance issues in case of some projects. The company is working with most of the clients as these are the responsibility of the clients.

Low Margin of JMC compared to industry peers is largely on account of the company has incurred lot of capex in diversifying its capability beyond F&B, which largely used to be the prime business/focus of the company. Now the company has transformed itself and has diversified order book and new verticals are yet to mature.

JMC vertical EBITDA margin - F&B will be in the range of 9-10%, Power orders will be in double digit. Infra orders are of a low margin game at about 3-5%.

Capex by parent company is Rs 100 crore and as overall Rs 175-200 crore excluding equity in development SPV.