KEC International unperturbed even as second Covid wave postpones tenders

KEC International
Despite tendering in the engineering and capital goods industry facing postponement due to the ongoing second wave of COVID-19, KEC International remains unperturbed eyeing overseas orders to make up for domestic order loss.

“Tenders are getting postponed currently in the domestic market as clients are facing operational issues due to Covid-19. But for us, there are huge tenders that have come out in Saudi last week. There are tenders elsewhere, too, and so we (KEC) need not stick to the India story. Even if tendering activity in India is weak for some more time (due to the second wave), we have nothing to worry,” Vimal Kejriwal, managing director and chief executive officer of KEC International, told Business Standard.  Despite the ongoing glitches in tendering this year, Kejriwal said the business scenario in India is overall much better than last year.

At present, the company has a presence in about 30 countries. Among business verticals, it is present in power transmission and distribution (T&D), cables, railways, solar and civil.

In FY21, of the total orders the company bagged, about 60-65 per cent was overseas and balance domestic. Normally, the overseas versus domestic order ratio for the company is 50:50. During the  year, KEC International saw its earnings before interest, taxes, depreciation and ammortisation (EBITDA) margin shrink to 8.7 percent from 10.3 percent in FY20 as Covid-19 hit businesses across the globe.

The RPG Group company in FY22 so far has already quoted around Rs 20,000-25,000 crore order tenders on consolidated levels.

“We are awaiting results of the Rs 25,000 crore order tenders and will be quoting for another Rs 30,000 crore order tenders in coming months,” informed Kejriwal.

The company’s order book along with lowest bidding was of over Rs 25,000 crore in the fiscal gone by.

For the current FY22, the company has chalked out a capital expenditure of Rs 200-250 crore, which will mainly be deployed for India business.

“We will be spending the capex amount via internal accruals mainly for our railway and civil business towards procuring equipment. About 90 per cent of the capex is for India business,” informed Kejriwal.

Among its business verticals, the company’s India business is divided in a 50:50 ratio between non-T&D and T&D, while in the overseas market it is present in T&D alone.

With an ongoing second wave and a likely third wave as per experts, KEC International is of the view that the impact on business would be minimal going ahead.

“Overall, the pandemic has been ongoing for more than a year now but the level of preparation at units and project sites is much higher. Even in the second wave, unlike last year all plants are operating. All procedures are in place. In one year, we (industry) have ensured that work is not getting affected. Alongside, frequent testing is getting carried out unlike last year where we (industry) did not know what to do. Due to this, large industries are not impacted even in the current second wave, which is stronger than the first and thirdly, vaccination, which is an important step,” explained Kejriwal.

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