Infrastructure player Ramky Infra has found the going a bit rocky of late. First, competition in the roads segment — where it was building up presence — heated up rapidly. Then, it found itself on the receiving end of a CBI probe. While it clarified the circumstances surrounding the probe, its stock price remained stubbornly down. The company has now altered its strategy to cope with changes, says Mr Y R Nagaraja, Managing Director. Excerpts from the interview:

How has your segment mix changed as you diversified?

First and foremost, we are, and historically have been, a water company. Over the last 16 years, the majority of our turnover has been from the water segment, where we have built considerable expertise. In the last year, however, the trend changed with more projects coming our way in the transportation sector . The buildings segment, which used to usually take up the second spot in our business , took a backseat to transportation.

So, will you be focusing more on road projects this year as well?

Well, if you analyse this financial year, we actually haven't done well in roads. Orders are mainly from water and a bit from the buildings segment. In the coming quarters too, we will concentrate on these two segments and lower (our) focus on roads. The competition in bidding for road projects is much too aggressive for us; we don't want to be caught up with that. So, we will just consolidate our existing projects and adopt a wait and watch approach. As far as our overseas projects are concerned, the Gabon (Africa) park is going ahead full-steam. We are trying to bag a few more projects in Africa. We are also observing the situation in the Middle East. We have decided to concentrate only on the water and roads in overseas projects. What we also have to do is cut down our working capital cycle. We are now at 150-155 days. Our aim is: 120-130 days by March end. In the long run, we are attempting to bring it to 110 days.

What is the share of overall revenues that you have received as a developer?

Currently, it is around 15 per cent and can increase by about 5-8 per cent, most of which is from roads and not our industrial parks or special economic zones.

The latter have a longer gestation period; we are confident of closing our road projects in the next 24 – 30 months. The parks, on the other hand, will take about 3-4 years.

How have segment margins fared?

We have averaged rather healthy margins of around 13-15 per cent on road projects. On water projects, we're averaging 11 per cent, while margins for buildings are at 10 per cent. Margins on roads are better than water projects for us because we won these much earlier (and at comfortable premiums).

Additionally, we're already collecting toll on a few projects, so that's pushing up margins from the segment.

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