Patel Engineering Plans 25% Order Book Expansion Over Three Years
The Patel Engineering JV was recently declared the lowest bidder for a Rs 1,275.3-crore contract by the Madhya Pradesh government.
Patel Engineering Ltd. plans to increase its order book to Rs 25,000 crore in the next two to three from the current Rs 20,000 crore.
The company will focus on its core business segments—hydro and irrigation—as it aims to grow its order book, said Kavita Shirvaikar, chief financial officer at Patel Engineering, in an interview with BQ Prime.
The company's current order book stands at Rs 20,014.2 crore, which includes 49 ongoing projects. The company estimates an average timeline of 4-5 years for the hydro projects to get executed, while the irrigation projects would have an execution timeline of 3-5 years, said Shirvaikar.
The company has identified opportunities worth Rs 2 lakh crore in its hydro segment over the next 3-5 years. Shirvaikar said that Rs 90,000 crore of opportunities lie in the irrigation segment via the Pradhan Mantri Krishi Sinchayee Yojana. The government's Jal Jeevan Mission has an allotted budget of Rs 3.5 lakh crore, and the company sees opportunities coming from the water supply sector as well.
The company projects a 10% order book growth and 10-15% revenue growth for fiscal 2024, said Shirvaikar.
Recent Order Win
The Patel Engineering JV was recently declared the lowest bidder for the Rs 1,275.3-crore contract by the Madhya Pradesh government. It entails EPC (engineering, procurement and construction), testing, trial runs, operations, and maintenance of the multi-village drinking water supply scheme.
The project is to be completed within 24 months, and the company will operate and maintain the scheme for 10 years. The project is located in Ujjain and Indore in Madhya Pradesh. Since Patel Engineering will execute the contract as part of the joint venture, its share in the project would be 35% or Rs 446.36 crore.
Shirvaikar said that the company will see a Rs 200 crore revenue addition per annum from the new contract and will realise Rs 50–100 crore revenue this financial year.
Clientwise Revenue Breakdown
The company's revenue breakdown, as of Q1 FY24, included 54.36% contribution from the central government and PSUs, 41.75% from state government departments and 3.88% internationally.
Shirvaikar said that the company's primary focus is the domestic side of business. The company operates in Jammu and Kashmir, Maharashtra, Arunachal Pradesh, Madhya Pradesh and Himachal Pradesh.
Internationally, the company has two ongoing projects in Nepal, and it will focus on countries like Nepal and Bhutan where more hydroelectric opportunities exist, she said.
Debt Reduction
The company's consolidated total debt is down 13.08% year-on-year to Rs 1,955.68 crore this quarter from Rs 2,249.94 crore a year ago.
Its working capital debt also declined 34.28% YoY to Rs 1,114.29 crore in Q1, while its term debt rose 11.64% YoY to Rs 841.38 crore.
The company targets to reduce its consolidated debt by an additional Rs 500 crore in the next 2-3 years, said Shirvaikar.
Watch the full interview here:
Updates an earlier version to correct the order book number in the text of the story.