Monday, September 27, 2010

XL Telecom - Interview.

Q: Did Goldman try to renegotiate further because you had brought down the conversion price from Rs 260 to Rs 150, but even at Rs 150 it was five times the market price?

A: There was no negotiation as such because the RBI guidelines only allowed the last Rs 150, plus of course the face value, Rs 160 is actually the conversion price.

Q: So what is Goldman’s stake now in your company post the conversion?

A: On behalf of couple of more people, it is close to 14.5%.

Q: What do you mean when you say on behalf of couple of other people?

A: It is P-Notes as we understand because the initial investor was Sansar Capital. As I do not know currently who are all the people who have converted, few of them had kept the original investors in the P-Notes. Maybe it is on behalf of somebody else, it may not be completely on behalf of Goldman Sachs.

Q: It’s 14.9%, the collective shareholding?

A: Yes.

Q: So who holds the remaining shares of the company?

A: There are lot of other institutions and promoters and general public as of now.

Q: What is your business looking like, the renewable energy side now?

A: Europe is picking up very well in the last few months. Post Lehman there was serious fall off business in 2008 September onwards. Last one quarter we have got close to Rs 150 crore worth orders from Europe. We are seeing a good visibility in Canada, Australia and other parts of the world.

Even in the case of India as we have observed a lot of tenders have been floated and lot of people have been allocated. We are seeing close to about 20% market share even in India where we have reached MoUs for establishing the solar parks close to about 20 MW. So, we should get close to Rs 200-300 crore from the Indian business as well, going forward.

Q: What is your current order book though now in solar?

A: Current firm order book is Rs 154 crore. We have another close to Rs 200 crore MoUs, we call it as MoU because the client has not got still the financial closure for their project. Till they get the financial closure, we enter into MoU and once they reach the financial closure we convert into the firm order.

Q: What is the execution timeline for Rs 200+150 crore?

A: This should be close to about six-eight months kind of timeline.

Q: So all of it will be booked in the next one year, this order book?

A: Yes. We are targeting about Rs 700 crore in the next 12 months that is October to September timeframe.

Q: With what kind of profitability because your last disclosed numbers still had a net loss of Rs 50 crore?

A: It was basically due to fall in the selling prices as we had to revalue the inventories accordingly. Now, the uptick is there in terms of price realization. So, we do not see that kind of a problem going forward. But the margins are about 15-17% gross margins and net margins are about 8% level.

Q: Are you sorted out on your balance sheet because you had run into a lot of problems, debt had to be restructured. Currently things are okay or do you still have a lot of pending obligation to the banks who restructured?

A: The CDR package has been completely implemented, banks have been very cooperative and they have in fact converted their interest outstanding into preferential equity. So, close to Rs 100 crore they will be taking cumulative redeemable preferential shares. So, currently things are in order and we should not have any problem from them and they have been very cooperative at this stage.

Q: You had taken some approvals to raise equity as well to the tune of USD 100 million or up to USD 100 million, any equity raising that you have in mind?

A: We are planning about 25 million to raise before December. This is basically for implementing the solar power projects in Canada and Australia.

Q: So that will be a QIP?

A: Either QIP or FCCB kind of an instrument.


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