PUNJ LLOYD

Punj Lloyd had surprised the Street with a turnaround for Q1FY14. The company posted a consolidated net profit of Rs 40 crore compared to the loss of Rs.13 crore. This turnaround was possible due to the Rs.48 crore coming in through its minority interest or profits added by the other firms where the company has a minority interest. But for this, the company would have remained in the red, with a net loss coming in at Rs.8 crore. Its net sales for the quarter rose 11% at Rs.3000 crore. The company has stated that it has a strong order backlog of Rs.20,868 crore and 65% of this order is from Middle East, Africa, and Asia Pacific.

The worrying aspects in the company remain. Its interest outgo is huge. For Q1Fy14, it was at Rs.196 crore, same sequentially, but YoY, it was up over 4%. For entire FY13, interest outgo was at Rs.781 crore. The company’s total debt is around Rs.5500 crore and it hopes to refinance part of its debt, up to Rs.1400 crore into dollar loans over the next six months. It had also spelt out its plan to reduce debt but no roadmap about the quantum and route has been spelt out by the company. Punj continues to borrow, mainly short term borrowings to meet its working capital needs and that remains the single biggest challenge – to its earnings and workings.