JP Chalsani, chairman, Punj Lloyd says the company's will garner over 10 percent margins from its latest order win- the tank farm project in Malaysia worth Rs 3515 crore.
Speaking to CNBC-TV18, Chalsani says the project, for a subsidiary of Petronas, should be completed over the next 2.5- 3 years and takes the company's order book to a total of Rs 9940 crore.
Furthermore, Chalsani says a pick up is returning globally with the company seeing new orders from Chile and Turkey.
But that's not all that's cheering Chalsani. He expects to pare down his debt by atleast 35-40 percent this year.
"We have a lot of debt and we will pare it by the monetization of non-core assets. So this quarter onwards, there will be a very significant improvement in our perfoemance," he adds
Below is the edited transcript of JP Chalasani's interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.
Latha: This is a very handsome win and it takes your order book as well to a huge Rs 24,000 crore thereabouts. Can you give us some more colour about this order, what margins does it bring you and by when do you have to complete this one?
A: It is about USD 6-7 million order for a subsidiary of Petronas. In fact, this is the third time we are working for Petronas. It is one of our repeat clients and we should be able to complete this project in the next two and a half to three years. Obviously at this stage, the margins are expected to be healthy which is upwards of 10 percent. Let us wait and see how things shape up.
Sonia: What is the total order backlog at this point post winning this order?
A: It is about Rs 25,000 crore. This year order book till now has been about Rs 10,000 crore and 100 percent of it has come from outside India.
Latha: Are you getting a sense that things are on the mend globally for your sector?
A: Globally, yes, we are seeing lots of things happening on that especially in the pipeline and tankage and the process industries and in fact they are quite a few bids in Chile, Turkey and different places but hopefully with the new government coming in India, we expect that things will start happening in India. Like in road sector, we are seeing some momentum, first bids have gone in this month and some more bids are due this month. So I think whatever the government was talking about should get converted into contracts slowly but maybe by Q4 of this year. Till then we are depending merely on the global market.
Latha: Can you tell us how are the things shaping up at the balance sheet level, what is the total debt and how much might you be able to retrieve by the end of the year?
A: Currently, I have got about Rs 6,000-7,000 crore of debt on the balance sheet on this. As I mentioned earlier on your channel that the aim is to bring it down by 35-40 percent by end of this financial year either through the monetization of non-core assets as well as some large claims recovery, which seems to be now at the end of the tunnel.
Punj Lloyd stock price
On September 08, 2014, at 11:10 hrs Punj Lloyd was quoting at Rs 40.60, up Rs 3.65, or 9.88 percent. The 52-week high of the share was Rs 60.85 and the 52-week low was Rs 21.90.
The latest book value of the company is Rs 112.93 per share. At current value, the price-to-book value of the company was 0.36.
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