KEC International to foray overseas in solar segment for better margins

Even as India’s solar prospects look bright, engineering company KEC International looks to foray into overseas markets in the solar segment for better margins, a top company official said. In addition to solar, the company will also look at railway opportunities in foreign markets.

The company also looks to grow its order book by 10% and revenue up to 20% in the current financial year.

“For solar, our entire order book right now is India and now the focus is with our presence in 33 countries on how do I take my solar business overseas,” said Vimal Kejriwal, managing director and chief executive officer, KEC International. 

As of date, the company’s total order book stands at Rs 12,500 crore. Of this, solar projects contribute 5% to the total order book value.

Kejriwal further explained expansion in the solar space would be simpler than a wind power sector expansion. “We have a network and access to the client and power utilities. We do not need to set up big manufacturing facilities as required for wind,” he added. The company plans to target countries like Saudi Arabia, the United Arab Emirates (UAE) and others in West Africa and Association of Southeast Asian Nations (ASEAN) region for these solar projects.

“The margins are expected to be better than India since the developers in India are very aggressive in their pricing and that puts pressure on the engineering, procurement & construction (EPC) margins,” Kejriwal further added.

Of the Rs 12,500 crore order book, international orders contributed about 55% in the last financial year. “For the previous two years, India contributed 55% to the total order book, but this trend reversed in the last financial year,” Kejriwal said. 

The company has a presence in various countries, including Afghanistan, Egypt, South Africa, Sri Lanka, the United States and Australia. In April, the company informed exchanges it has won new orders worth Rs 1,781 crore, of which Rs 1,270 crore worth of orders were in the international transmission and distribution segment.

The company is hopeful orders from railways, solar and international markets will help it grow its order book by 10% in the current financial year. “The guidance on the revenue side is 15% to 20%,” Kejriwal said.

The company’s overseas portfolio is currently dominated by transmission and distribution orders. In addition to solar projects, the company also plans to look at railway projects in the overseas markets. 

“In the past, we have done international railway orders, and it is a matter of time that we will seek work there again,” Kejriwal said. 

At present, railways contribute about 10% to 12% to the company’s total order book.  For the nine-month period of the financial year 2017, the company reported total income of Rs 5,870.72 crore and a net profit of Rs 159.25 crore.