If the current Government is elected back with majority then the existing power policy will continue and will get further boost up. Business model of the Company and the rgoernment policy gives clear a road ahead for for next at least 5 to 7 years. The total power demand as on date is expected to increase by at least 50% in next 8 to 10 years i.e we will have to create power infrastructure of around 50% in next 8 to 10 years (50% of what has been created during last 75 years.).
The Company will not only be beneficiary of CAPEX in power structure but also of expansion in infrastructure, mining, Cement, Iron & Steel,Power, Fertilizers, Petrochemicals & Refineries, Metros (underground as well as elevated) and Windmill sector. etc.
Largest Organised listed player in India (Sixth largest in world) with experience of 35 years and satisfactory track record of Corporate Governance.
Apart from this foray of the Company into EPC segment is a sweetner.
EPC is very risky and working capital intensive business but Company has decided to restrict its EPC business only for Wind Power and asper news article there is already dearth of EPC players in Wind segment. Further Company will be entering EPC business along with its Crane rental business which mitigates the risk overall business risk.
Company business model makes EPC asset light, low work capital requirement and faster payment mechanism.
Company has guided for 10x growth in EPC business to Rs 250 Cr with margin of around 13%.
Some highlights of Concal:
“So, we have a very healthy outlook for the EPC both on the project and wind side. And we expect our revenues contribution from the construction from the wind and project side to have a significant revenue contribution this year”
“See we already disclosed the necessary order that we already backed to the stock exchange. And based on that intimation, which is already circulated, we estimated to get a revenue of between 200 crores to 250 crores from the EPC business.”
Sham D Kajale: “See it is slightly working capital intensive business, asset light, but what is happening we are tying up this business along with the crane business and we are working, taking the orders based on the 30 days credit period. So, if there is any delay happens with respect to EPC related business, we have option to close down the crane operations. So, that is the advantage that we have so, that our working capital should not get blocked.”
Okay. So, till date whatever EPC business we have done has had a zero drawn on our working capital because we are getting paid within 30 days from our customers. So, that is a unique way in which we have approached the EPC business. Although our margin is low and it is working capital intensive, we have been able to mitigate those challenges?
Sham D Kajale: Last financial year we have paid cash credit interest of Rs.1,62,000 on a cash credit limit of 100 crores that shows how judiciously we are using our working capital limits."
Disclosure: Invested from lower levels and added during current fall. Will add more post elcetion results as that will be a critical aspect for holding stock for next 4 to 5 years
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