In an interview with CNBC-TV18's Ekta Batra and Reema Tendulkar, K Jalandhar Reddy, executive director, KNR Construction, spoke about the company's deal pipeline, future plans, its perceived conservative approach to project bidding as well as how it has managed to keep its debt levels low.
Also read: CRISIL assigns valuations grade of 3/5 to KNR Constructions
Below is the transcript of the interview.
Ekta: What is your current order book looking like at this point in time? Can you tell us how many projects are you executing and what is the cumulative backlog that you have?
A: Right now we have the order book size of Rs 1200 crore after the first quarter-ended and the total orders are spread across four-five states in India and around 10 projects together.
Mainly we are doing a build-operate-transfer (BOT) project in Kerala worth about Rs 790 crore. KNR itself is a developer there.
Apart from that we have orders in Karnataka and orders in Madhya Pradesh and we are also executing in Andhra Pradesh. We are doing a river bridge between AP and Chhattisgarh border. Recently we bagged a project in Tamil Nadu, which is a flyover project of Rs 147 crore.
Reema: One of the criticisms about the company is that perhaps you have been very cautious so far in bidding. So it worked well for you all in the recession or in the downturn but now that things are picking up will the company be on the back foot? How would you respond to that and are you now going to aggressively bid that we have seen a revival in the economy?
A: We have been bidding in the past three years but our bidding was not much successful but the government of India has now announced it would come out with more engineering-procurement-construction (EPC) contracts. We are well placed to have more and more EPCs for our company so we are more comfortable in working in EPC projects rather than BOT projects. We are well geared up to have many projects.
Ekta: Can you give us a sense in terms of how you have managed to keep your debt at such negligible levels? What is your absolute amount at this point in time and do you plan to scale it up if in case your bidding increases?
A: Yes definitely we would like to scale up when the bidding goes up and actually we had executed a lot of EPC projects earlier and that is why we are able to make more margins from EPCs and we kept our debt at very low levels. Even after doing three BOT projects, our debt level is negligible.
In the near future, we can even gear up for some more BOT projects as well EPC projects. Our net worth allows us to bid on BOT projects too.
Ekta: What is your absolute debt and cash on books?
A: Rs 68 crore is the debt what we have on standalone basis.
Reema: Now that the company will pursue all opportunities, can you tell us what the L1 status is, which orders are you bidding for, what would the size be? Give us a picture about what the deal pipeline going ahead will look like?
A: Right now we don't have much projects on bidding side. But definitely now the EPC contracts are going to come up in coming one-two months and we are geared up to bid on those.
Like in Assam we have already done projects in Assam so we are again aiming some projects in Assam, north east part of India as well Rajasthan and Tamil Nadu. Even in Karnataka there are more projects coming in EPC base. So we are gearing up for that.
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