Sandeep Garg: Yes, it has been a very good start, and a good start is half the work done. We expect the overall consolidated level revenues to be in the range of Rs 4,000 crore. You are right, Q2 is always a slower quarter for our industry. However, we believe that we will still have growth year-on-year. With the strong order book that we have of about Rs 13,000 crore at the consolidated level and excluding the Rs 2,000-crore orders which we have opened L1 and on an overall level, we are very confident of turning in very good results for the overall year.
What is driving that confidence? Your margins have been driven by good execution. What will be the key margin drivers? What will be your revenue drivers going forward?
Sandeep Garg: We have been very consistent in our revenues. Coming to our profit margins, at a consolidated level, for this year, we should be in a position to deliver EBITDA of about Rs 700-750 crore range. Overall, we have been very selective in picking up the projects. We do not bid too aggressively. The space is right for us. The time is right. We can be reasonably sure that our results going forward are going to be very strong.
The government’s push continues to be very strong on infrastructure development. Today morning, there is an article that says the government is considering BOT projects of about 50,000 crores for the eight-road projects. The budget carried about 100 STPs in the towns which is right for us. If we look at the tunneling. We have seen so much flooding recently in Maharashtra, Mumbai, Pune, Delhi, and everywhere. We believe that tunneling is one of the options that the government will be considering to manage the cities a bit better. I think we are in the right places and the government push is there. We are very confident that we will continue to give the returns that we have targeted and overall, the whole industry is doing well.
Let us talk about your order book then, the consolidated order book of about Rs 13,000 odd crore. What is the target that you have and which are the segments that are showing strong demand inquiries that you are likely to foresee strong growth?
Sandeep Garg: Fortunately, we see all three segments are present – a very strong pipeline, be it the road where the government is bringing in BOT toll projects where the strong balance sheet players will have played for them and we are a very strong balance sheet company. We see about Rs 50,000 crore of work immediately on the road and about Rs 2 lakh crore in the medium term.
In terms of the government’s strong push on water – we have 17% of the world’s population, but 7% of the water resources – we see in the short term something like Rs 50,000 crore and in the medium term about Rs 2 lakh crore worth of orders in water as well. On the tunneling side, Welspun Michigan is a player – tunnels that are addressable because of our limitation in the range of Rs 50,000 crore. So, overall, in the three verticals that we are in, we see a lot of push from the government and a lot of opportunities. In addition to the Rs 2,000 crore worth of order where L1 was opened, I would expect Rs 4,000-5,000 crore of order books to be added at a consolidated level going forward.
Any capex plan for the next 12 to 18 months that you may have outlined for yourself? If so, how are you going to be funding this?
Sandeep Garg: We as a company are a satellite model and we do not invest in the capex much other than on the BOT toll or HAM projects. So, we invest in the projects. In terms of Welspun Michigan, there will be minor capex for sure, yes, because they are self-executors and they are into tunneling, but it is not substantive. We do not expect anything worth mentioning to be our capex expense going forward this year.
And what is the current status of the monetisation of your land assets? When are you hoping for realisations to come by?
Sandeep Garg: We do not have many assets to monetise currently. The monetisation will take place once we have completed our HAM projects, which are the Aunta-Simaria project and the Sattanathapuram-Nagapattinam road project. I expect them to be monetised in a couple of years from now. We do have certain inquiries around those acquisitions, but I think it will take at least one year to one-and-a-half years for us to complete that monetisation.