INTERVIEW: ED sees KNR Constructions sales over 10 bln rupees FY10
Wednesday, Sep 17
HYDERABAD - KNR Constructions Ltd, a city-based infrastructure
development
company, is expecting revenue of over 10 bln rupees by 2009-10 (Apr-
Mar), K.
Jalandhar Reddy, executive director, told NewsWire18 today.
The company, listed on exchanges in February, is expecting revenue
of 7.7
bln rupees in 2008-09.
"We are expecting at least 30-35% topline growth for next two-
three
years," Reddy said.
The company had posted net profit of 309 mln rupees on revenue of
5.6 bln
rupees in 2007-08.
.
ROAD AHEAD
KNR Constructions is in the road construction business and
currently
handles 22 major road projects across various states in India
including Uttar
Pradesh, Madhya Pradesh, Assam, Andhra Pradesh, Karnataka, and Tamil
Nadu.
"All these projects are scheduled to be completed in next one-two
years.
Some of them are under Build-Own-Operate-Transfer mode with joint
venture
partners," Reddy said.
The company handles each road project under a special purpose
vehicle
with a suitable partner, he said.
The company is developing a 60-km high way in Karnataka,
connecting the
Andhra Pradesh border to Bengaluru International airport near
Devanahalli, at
a cost of 4.4 bln rupees.
"Patel Engineering Ltd is the joint venture partner for this BOOT
project. We are expecting annuity income of 340 mln rupees per year,
up to
17.5 years, from the date of completion," he said.
KNR Constructions holds 40% stake in this joint venture, he said,
adding
that the project would be operational by the end of March.
The company is also a joint venture partner in the 5.6-bln-rupee,
52 km
Hyderabad-Nagpur highway project.
This project is expected to be completed by Mar 2010, he said.
"We are waiting for final hearing of a court case related to
national highway bidding process. Once it is settled, we will be in a
position to assess our roadmap for the next three-four years," he
said.
.
MARGIN PRESSURE
Despite inflationary pressure and high raw material costs, the
company is
confident of maintaining its EBITDA (earnings before interest, tax,
depreciation and amortisation) margin of 14.3%-14.5% for 2008-09 and
2009-10,
Reddy said.
"We are facing some pressure on material costs side. But, all our
projects
are well planned and have factored the cost escalation. We have a
strategic
approach to mitigate raw material costs," he said.
The company is expecting its net profit at 5-6% level, he said.
While road projects constitute 90% of KNR Constructions' total
revenue, irrigation and urban water management projects account for
the
remaining 10%.
"Segment-wise revenue mix may change in next two-three years, as we
are
looking for more opportunities in irrigation and urban water
management
schemes," Reddy said.
.
REALTY BUSINESS PLAN
KNR Constructions is mulling foray into real estate business in
next
two-three years, Reddy said.
"We have a land bank of nearly 150 acre in Hyderabad and Bangalore
and
some other parts of south India. We can leverage those assets for our
real
estate plans," he said.
However, the company has not finalised the quantum of investment
in
real estate business.
"Out of 150 acre land, 50 acre is located in prime areas of
Hyderabad
and Bangalore. There is scope to develop commercial space on this
land," Reddy
said.
The company may take a final decision in this connection on the
basis of
real estate market's movement in coming years, he added.
At 3:22PM, shares of KNR Constructions were traded at 56.40 rupees
on
National Stock Exchange, down 0.8% from Tuesday's close. End
.
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