The Hindu Business Line : KEC International sees Rs 800-cr turnover

KEC International Ltd (KIL), a RPG Group company involved in manufacturing and erection of transmission lines and towers, is likely to return to the black in 2003-04, after having made losses during the last four years.

Sources told Business Line that KEC's turnover is expected to be around Rs 800 crore in 2003-04 against Rs 742 crore in the previous year.

The company, in which the promoter group has 41 per cent stake, was one of the first Indian companies to bag a reconstruction contract in Iraq. The contract value of this job was around $36 million.

Sources said that while KEC has its manufacturing facilities in Jaipur and Nagpur, its workforce is spread over 20 countries where orders were being executed. "KEC has a strong presence in West Asia, Pacific Rim countries and in Africa," according to sources.

As a matter of fact, majority of the company's orders were from overseas. In 2003-04, the order position stood at about Rs 2,000 crore, of which Rs 1,500 crore were export orders. Countries where KEC has a presence include Abu Dhabi, Tunisia, Libya, Kuwait, Lebanon, Dubai, the Philippines, Malaysia, Egypt and Argentina.

Among the largest power transmission companies in Asia, KEC has laid over 30,000 km of transmission lines and erected 1.2 million tonnes of transmission towers across major rivers such as Ganges, Brahmaputra, Narmada and Nile.

Explaining the past losses, sources said that non-execution of projects and delayed payment on some overseas projects had pushed the company into the red, even as fixed costs had increased.

These included a Rs 700-crore order which was expected from the Madhya Pradesh State Electricity Board (which never fructified) and a Rs 300-crore payments problem with a project in Libya (which has now been resolved).

The company is now putting together a turnaround strategy, the main tenets of which were curtailment of operating expenses on the one hand while rationalising manpower and hemming in interest costs through a corporate debt restructuring programme on the other.

As a result, while personnel cost has been reduced by over 30 per cent, overhead costs have gone down by nearly 50 per cent. Interest costs were down by nearly 20 per cent. Sources said that over the last four years, KEC had trimmed its workforce by 300 with the headcount now standing at about 2,300.

Pointing out that the company had set off its past losses against its reserves, sources said KEC thus had no baggage of accumulated losses. To a question, sources said that the board would decide on the dividend issue when it meets later this week to consider the results.