Will continue to focus on civilian business, expects it to grow 40-50% next year: Vimal Kejriwal, MD and CEO, KEC International

The company is also starting to bid for global contracts in Bangladesh, West Asia and Africa for its oil and gas pipeline business, which would be a Rs 1,000 crore business by FY24.

KEC International expects to improve its margins, which have been affected by rising commodity prices, by continuing to focus on civil, urban and rail infrastructure projects. The RPG Group company expected to post 10-15% revenue growth in FY22, but is expected to end the year with 8% growth. The company is also starting to bid for global contracts from Bangladesh, West Asia and Africa for its oil and gas pipeline business, which would be a Rs 1,000 crore business by FY24, its manager said. General and CEO Vimal Kejriwal to Rajesh of FE. Kurup. Edited excerpts:

Q. Wasn’t the third quarter one of the best for KEC International? Was it due to headwinds on commodities?

We had a margin impact of about 200 basis points in the quarter due to commodity headwinds. We also continued to lose money in our Brazil operations, which should be more or less resolved by the end of this quarter. At the beginning of this year, we had forecast revenue growth of 10-15%, but due to geopolitical issues and the continued impact of Covid-19, we have seen overall growth of 8% over the last three quarters, which I think is good. We would close this year at roughly that growth rate.

Q. What raw materials burned during the quarter?

Cement prices did not rise significantly, while steel and aluminum prices increased during the quarter, impacting margins. Over the past year, we have secured sufficient supplies of steel, so our exposure to steel has decreased significantly. Now we are executing new orders and this will help us improve our margins. However, we may not be able to return to pre-Covid levels of 10% immediately but we will see an arrest down margin. Commodity prices had begun to fall, but the Russian-Ukrainian war pushed them up again.

Q. What is the position of the order book and tender pipeline?

Our current order book position is around Rs 23,500 crore, with L1s (lowest bidder position) of around Rs 5,000 crore or more. So, we are roughly at around Rs 28,500 crore. We have placed quotes of around Rs 20,000 to 22,000 crore and our tender pipeline has increased to Rs 55,000 crore. Our civil business backlog stands at approximately Rs 6,500 crore and civil business revenue is expected to double to Rs 2,000 crore in FY22. We will continue to focus on civil business , which we expect to grow by 40-50% next year.

Q. T&D order intake has been good for you this year…

Yes, this year we had a large order intake of around Rs 6,700 crore from the Training and Development (T&D) business. We have around Rs 2,000 crore of L1 in T&D, mostly from West Asia.

Q. The global markets bidding pipeline remains strong, while the domestic market would not resume until FY23?

Power Grid has launched many tenders and many solar projects are also underway. I think starting in the second quarter of FY23, we’ll start to see a lot of action.

Q. Following the acquisition of Spur Infrastructure, were you also planning to bid on global contracts?

It is a Petroleum Engineering and Pipeline (EPC) Procurement and Construction business and it will be a Rs 1,000 crore business by FY24. We will soon begin bidding for global contracts in Bangladesh, West Asia and Africa.

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