Buoyed by an order inflow of Rs 2,200 crore in the first quarter, KEC International’s order book has risen to Rs 9,462 crore.

The bulk of fresh orders (Rs 907 crore) came from the power transmission sector in India, mainly from the Power Grid Corporation of India Ltd. The company also received orders of around Rs 200 crore each for cables, power systems from Kenya and the railways of Turkmenistan.

KEC International, part of the RPG group, is a leading player in the power transmission business and has a presence in over 20 countries. In fact, only 43 per cent of the order book of Rs 9,462 crore comprises orders from India.

Margins under pressure

In the first quarter of the current year, KEC International achieved a turnover of Rs 1,337 crore against Rs 2,018 crore in the previous quarter and Rs 1,023 crore in the same quarter of last year. It made a net profit of Rs 33 crore, the same as in Q1 last year, but substantially less than the Rs 74 crore it made in the last quarter of last year.

The company has told analysts that its new businesses of cable, telecom and water, currently operate at low margins. Also, KEC had to contend with a Rs 16-crore mark-to-market loss on account of rupee depreciation. The company has said that it does not face much competition from the Chinese in the domestic power business. It also expects margins to get better in the coming months.

New businesses

KEC has been manufacturing cables of capacity of 33kV and 132 kV for a number of years. Now, the company is setting up a greenfield plant at Vadodara, Gujarat, for producing higher capacity cables. The first phase of the Rs 160-crore facility went on stream last month. The second phase, for producing extra high voltage power cables, of capacities upwards of 220 kV, is likely to be commissioned in the next two months.

‘Water’ is the newest business of the company. KEC undertakes water management projects which comprise intake systems, transmission and storage, treatment and distribution, collection and disposal.

Last year was the first full year of operations for KEC’s ‘water’ segment and the company won orders worth Rs 323 crore.

mramesh@thehindu.co.in

(This article was published on August 3, 2012)
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