The three projects will add around Rs500 crore to the order book, which at present is around four times 2008-09 revenue of Rs1,045 crore. The three projects will not add to revenue immediately as they have a gestation period of four-five years.

Among infrastructure firms, Madhucon has a more diversified portfolio. According to the management, around 32% of its order book consists of irrigation projects, 23% of power and 27% is in roads, with the rest in mining, sugar and construction of buildings. The downside is that these sectors are capital-intensive with long gestation periods.

Graphic: Yogesh Kumar / Mint

Madhucon’s financials for the nine months to December are not very upbeat. Revenue grew around 30% from a year earlier to Rs820 crore. But higher costs brought down operating profit margin and net profit margin every quarter on both annual and sequential basis. Operating profit margin for April-December was 12%, against 15% in the year-ago period. And net profit margin dropped from 7% to 4%.

Higher costs in the first nine months of 2009-10 are mainly the result of the increase in raw material costs. This is due to the near-completion of a couple of road projects where material costs are already billed, while revenue is yet to trickle in.

Meanwhile, its 1,920MW coal-based power project will take off in four phases, with the first 300MW stage being commissioned during 2010. Financial closure for the second phase is in progress now. Besides, the company is into coal mining in Indonesia through a subsidiary.

All these capex programmes have led to higher debt, and an increase in interest costs. From around Rs14 crore in the nine months to December 2008, interest expenses rose to around Rs20 crore in the nine months ended December 2009.

So while revenue has been growing, Madhucon’s net profit has contracted, particularly in the second and third quarter. For the nine months ended December, net profit contracted by 11% over the year-ago period to Rs36 crore.

With the bulk of its existing projects in roads, irrigation and power getting monetized only by fiscal 2011, revenue for the full fiscal is expected to grow around 20% over the previous year’s figure of Rs971 crore. Profit margins, too, are expected to remain under pressure.

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