KEC Eyes Rs 900 Crore From Overseas Business

RPG Group firm KEC International may sign overseas contracts valued at around Rs 900 crore within the next two months in transmission and rural electrification, a top company official said.

“We are close to sealing around Rs 900 crore of orders within the next eight weeks. These overseas contracts are from Namibia, Algeria, Abu Dhabi and Afghanistan,” KEC MD Ramesh Chandak told PTI.

KEC International is a key player in transmission towers construction and recently two group companies, RPG Transmission and NITEL, were merged into it. NITEL is among the top five companies in the telecom tower business.

“The entire physical merger of these three RPG Group companies, which employ around 2,300 persons, should be completed by March next,” he said, adding “post merger, there will be tremendous synergistic benefits accruing to the Group and KEC”.

While the orders from Namibia, Algeria and Abu Dhabi are for transmission towers, the one in Afghanistan is for rural electrification. The Abu Dhabi order is worth Rs 400 crore, Algeria and Namibia around Rs 200-crore, while the rural electrification order from Afghanistan is valued at around Rs 300 crore. Besides, KEC has bagged a Rs 200-crore contract from the state-run Power Grid Corporation in the domestic market.

The company’s order-book presently stood at Rs 4,800 crore, said Chandak.

RPG Group’s entire tower transmission operation will be brought under the KEC umbrella, enabling the corporate entity to give a sharper focus to the business. NITEL is being merged with KEC “as we feel that it has the potential to grow rapidly under the KEC umbrella than on its own”, said Chandak.

Going forward, KEC would continue to focus on its core business segments of transmission towers, rural and railway electrification while telecom towers would comprise a new and important segment for the company, he said.

KEC does not envisage a huge capex programme in the medium-term.

“Our capex is not huge - it will be around Rs 40 crore a year over the next three years, mainly in augmenting our construction equipments and building up our IT systems,” said Chandak.

On funding, he said internal accruals would take care of the company’s requirements to a large extent. “If needed, we can borrow. There is no immediate plan to tap the market or go in for a GDR or an ADR.”

KEC has been growing at a compounded annual growth rate of more than 30 per cent in the last three years and the same growth momentum was expected to be maintained, going forward, said Chandak.

The company had clocked a turnover of Rs 2,100 crore in 2006-07 and profit after tax of Rs 105 crore.

“We expect our turnover to be around Rs 2,500 crore this financial year. With the merger of RPG Transmission and NITEL, this should rise to the vicinity of Rs 3,000 crore,” he said.

* These overseas contracts are from Namibia, Algeria, Abu Dhabi and Afghanistan

* The Abu Dhabi order is worth Rs 400 crore, Algeria and Namibia around Rs 200-crore, while the rural electrification order from Afghanistan is valued at around Rs 300 crore. Besides, KEC has bagged a Rs 200-crore contract from the state-run Power Grid Corporation in the domestic market

* RPG Group’s entire tower transmission operation will be brought under the KEC umbrella, enabling the corporate entity to give a sharper focus to the business.