McNally Bharat Engineering Company Ltd 4, Mangoe Lane, Kolkata Information Update

Transcription

1 McNally Bharat Engineering Company Ltd 4, Mangoe Lane, Kolkata Information Update Coverage of this update :- Financial results for the year ended 31 st March, 2008 Company management s understanding on future outlook Profile containing historical and basic information on the Company Highlights : - Year ending Unit 31 st Mar st Mar Total Income Rs crores EBIDTA (Operating) -Do Profit before Tax -Do Profit after Tax -Do Earning per Share Rs EBIDTA/Sales (%) Note : i) Order book Rs 2323 Crore as on 31 st Mar 08. ii) Project business is subject to quarter to quarter variations and one quarter s performance in isolation does not necessarily indicate full year s performance. Review of Operations: - A. Overview of the year During the period, the operating margin (8.35%) has improved significantly over previous year (6.04%). This has been possible due to the increase in sales of equipment and overall improvement in margins in Project business. Top line during this year increased by 8% due to delay in receipt of steel orders and subsequent deferral of activity. Delay in receipt of steel orders from RINL and IISCO postponed the billing to Q4 and beyond. Share of Equipment business has gone up to 15% from 13% in last year. Entire FCCB of US$ 10 million have been converted in Apr 08. Entire warrants allotted to the promoters have also been converted. B. Product Business During the period under review the top line in product business recorded a healthy growth of 28% as compared to the previous year. Order book as on 31 st Mar 08 stands at Rs 115 crores. Further orders of Rs 80 crores are under different stages of negotiation. During the year, the division has made break through in export market. The company has been approved by Solios Corporation, France ( a global leader in aluminum engineering) as their supply partner. Company expects to get regular orders from Solios. Similar tie-ups are expected to be fianalised shortly with some other European metal majors. MBE is eyeing to position itself as a global sourcing hub for the

2 European metal majors. The division expects to secure major orders from the overseas market in the coming months C. Project Business During the period under review, the top line in project business grown by 6% over the previous year. Order book as on 31st Mar 08 stands at a healthy level of 2208 crores. Further bids totaling Rs 4360 crores are at different stages of decision. The Company expects to finalise a substantial portion of the bid into final order in the coming months of this financial year. D. Break-up of Order Book ( As on 31 st Mar 08 ) 38% Break-up of Order Book 5% 6% Equipment Ash 9% Port Material 13% 29% Mineral Steel E. Break-up of Sales ( FY ) 10% Break-up of Sales (FY '07-08) 11% 15% Equipment Ash Port Material 45% 5% 14% Mineral Steel

3 F. Break-up of Sales (FY ) Break-up of Sales 10% 0% 13% Equipment Ash 10% Port Material 63% 4% Mineral Steel G. Break-up of Revenue Break-up of Revenue:FY ' % 0.4% 2% 1.8% 1% 4% Material costs Outsourcing 6% Staff Costs Other expenses Interest 17% 54% Depreciation Tax Dividend Retained earnings H. Major input costs Since Feb 08, the price of steel increased considerably. In addition there have been escalation in the cost of cement. Though, most of the contracts of the company are covered by escalation clause, there may be some impact on the margin on some of the unexecuted portion of some contract. However, the impact shall be kept within minimum level to keep overall EBIDTA at the level of around 7.5%. I. Ongoing Modernisation Plan at Kumardhubi and new fabrication Plant in West Bengal The ongoing expansion of capacity through modernization, is progressing

4 as per schedule in both the factories. The 1 st phase of this plan have been completed in end Dec 07 and commercial production have been declared on 1 st Jan 08. Post completion, the capacity of these plants shall be trebled. The entire project cost is spent from the FCCB inflow. The Company has already acquired 25 acres of industrial land near Asansol, West Bengal, for manufacturing special fabrication used in Steel and Power sector. The 1 st phase of the new plant is expected to be commissioned in FY 09. J. Future Outlook The company, based on its smart order book position and considering the robust growth in its participating sectors of activity, expects to maintain sustainable growth rate both in its top line as well as in bottom line. Considering the current orderbook, Company expects to register a topline exceeding Rs 1000 crores in FY 09 and expects to maintain the operating EBIDTA at the level of 7.5%. It is expected that there shall be strenthening in the global price of steel and other non-ferrous metals.the company expects to maintain the current improved level of margin. MBE s quest for innovation in design and project management is expected to meet the challenges to safeguard its growth. The company is expected to continue its presence, in a big way in the Steel sector modernisation packages of SAIL, Balance of Plant(BOP) packages in Power sector, Port expansion Programme of NMDP and capacity increase in non-ferrous metal sector. The company is in different stage of discussion with private power plants and private non-ferrous metal producers for their requirement of BOP (Balance of Plant) packages and process plants. During the current year MBE expects to book orders in civil construction, a new vertical that have been planned. Required machinery and people have been already mobilized towards this end. K. Acquisition of Sayaji Iron & Engineering Co Ltd(Sayaji) As announced earlier, MBE has acquired 68.28% of Sayaji and has also Given open offer under SEBI guideline. MBE as part of its corporate strategy and under its aggressive growth plan under Vision 2015 has ambitious target of growth in its equipment business. It was also mentioned in different forums that such growth shall be achieved through increasing existing manufacturing capacity in equipment business and also through acquisition of new capacity in the related area. The product range and skill set of SAYAJI fits in perfectly to MBE s business plan and SAYAJI s product range and the skill set shall provide great synergy to MBE and shall add sizeable value to MBE s equipment business in terms of volume, range and depth.sayaji is expected to achieve a topline of Rs 75 crores in , with an EBIDTA level of 18%.

5 L. Brief profile of the Company McNally Bharat Engineering Company Ltd (MBE) is a leading Engineering Turnkey Project Execution Company in India. The area of operation includes bulk material handling, ash handling system including powdered material handling, port handling systems including shipyard handling cranes, bulk handling and container handling cranes, mineral beneficiation plant for ferrous and non-ferrous equipments, water management including water and waste water treatment, supply and distribution, road construction and maintenance, open cast mining machineries including shiftable conveyor system, bucket wheel excavators, spreaders etc, structural fabrication, erection, piping and utilities. MBE also manufactures wide range of equipments used in construction, mines and metal production such as heavy duty slurry pumps, impact hammer crusher, dual chain mill, smooth roll crusher, reverse hammer mill, roller screen, ring granulator, grinding mill, rotary braker, traveling tippers, hydro cyclones, road construction equipments. MBE derives its key strength from its strong technical tie-ups with international leaders in the respective fields and also from its strong inhouse R&D and highly capable design, drawing and execution team. MBE s manufacturing facilities are located in Kumardhubi in Jharkhand and in Bangalore. Currently MBE is executing 25 projects across the country. M. Shareholding Pattern ( As on 6 th June 08) 18% Shareholding Pattern Promoters 21% 33% Fis FIIs/NRIs Mutual Funds 24% 5% Public Note : Above shareholding is post full dilution of FCCB and warrants. N. Vision Statement MBE s vision is to become one of the best-in-class one-stop providers of solutions in the area of infrastructure development across the sectors. MBE aims at growth, along with its partners in business and other stakeholders, through multifarious process of expansion, keeping high standards of corporate governance and providing quality products and services to the customers.

6 MBE believes that a successful business is beyond the quality of products and quantum of profit. It is a journey where all the partners and associate stay and grow with the company. Notes on this update: 1. MBE s Investor Relations activities are co-coordinated by Mr. Dibakar Chatterjee, Company Secretary(dbc@mbecl.co.in) and Mr. Prabir Ghosh, Chief Financial Officer (prabir_ghosh@mbecl.co.in). Telephone No ; and Fax no / This update is being issued after the Board of the Company at its meeting held on 14 th Jun, 2008 has taken on record the financial results for the year ended March 31, Some forward-looking statements are included in this update for better comprehension of the Company s prospects. Actual results may, however differ materially on account of several economic and market related factors not fully within the control of the Company. 4. This update is also available on the Company s website: In view of this, information in this update is also available to the public and does not therefore constitute unpublished price sensitive information under the SEBI (Prohibition of Insider Trading Regulations), 1992.