Expect Rs 2K cr order from Green Corridor Phase II; margin to pick up from Q4: KEC International

The second phase of the Green Energy Corridor has been approved by the Union Cabinet, on Thursday. The project worth Rs 12,031 crore will cover seven states and add about 10,750 circuit km of transmission lines. To understand what it would mean in terms of sheer opportunity for KEC International, CNBC-TV18 spoke to Vimal Kejriwal, MD and CEO of the company.

Kejriwal said that the Green Corridor Phase II can mean orders of about Rs 2,000 crore for the company. He added that the orders are expected to flow in from Q2 or Q3 of next year. Additionally, he expects the timeline for the project to be around 4-5 years.

He said, "The Cabinet has cleared around Rs 12,000 crore of projects, and the expected timeline is around 4-5 years. If you want to look at timeline, I think we should see this converting into orders for companies like us probably in Q2 or Q3 of next financial year. Number wise, we have been getting around 15-20 percent of these businesses so probably it makes it around Rs 2000 crore of business for us."

When asked about margins, Kejriwal believes they will start picking up from Q4 onwards.

“I think from Q4 onwards, the margins will start picking up. Metal prices, especially steel have softened, availability has improved, cement was also doing well in terms of prices for us. I think from Q4 onwards, you will start seeing a turn in the margin profile and hopefully, from Q1 or Q2, we should be getting closer to our normal margins,” he said.

When asked if COVID has had any impact on the company's orders or tenders, Kejriwal said that he hasn't witnessed any postponement on account of the pandemic so far. He believes the order inflow will be healthy for the company.

"We have not seen any postponement of tenders or otherwise on the ground situation. So I don't think we are looking at the postponement of orders. Even if new orders or new tenders get postponed, we do see a heavy order intake in the balance part of the financial year," he said.

Giving details about the civil business segment, he shared, "Civil business, last year, we did around Rs 1,000-1,100 crore. This year, we will do at least double of that for FY22 and maybe another 50 percent increase in FY23. Civil, we are doing very well."

On railway business, he shared that it has become a bit disappointing for the company. He explained that around 60-65 percent of the orders are still from the conventional railways and he expects to see 15-20 percent growth therein. However, going ahead, Kejriwal expects metros to become more important for the company over the conventional railway business.