KEC International, the engineering, procurement and construction (EPC) company of the RPG Group, recently bagged its first order in the oil & gas segment in West Asia. The company was also in the news after it was barred by the state-run Power Grid Corporation from new tenders for nine months for “alleged transgression of contractual provisions”. In an interview with Raghavendra Kamath, its MD and CEO Vimal Kejriwal talks about the company’s plans in West Asia, future prospects, as well as the Power Grid ban. Excerpts:
How do you look at the Power Grid action?
We do not foresee any material impact on our ongoing operations or financial position. Based on the robust tender pipeline of over Rs 1,80,000 crore and healthy L1 position (where the company is the lowest bidder) of over Rs 4,000 crore , we are confident of achieving our annual order intake target .
Since you have got your first oil and gas order in West Asia, will you explore more opportunities in the region?
We acquired an oil and gas pipeline company in 2021, but unfortunately, the market here did not shape up as we had expected. So we decided to expand it internationally. Last year we picked up two orders in Africa, and then we started focusing on West Asia. Now that we have got our first order, I think we are bidding for some more orders. It is a matter of time before the business starts showing a reasonable contribution in our overall numbers.
What kind of business do you expect from there?
Any business (in West Asia) should be giving revenues of at least Rs 1,000 crore. So, we are definitely looking at Rs 1,000 crore or more coming in year after year.
Many countries in West Asia are looking at solar plants, wind farms and so on for domestic energy consumption. How are you looking at these opportunities?
Two things are there. One is the renewable sector itself. We have been looking at whether we want to get into setting up facilities, doing EPC for them. Maybe now that our India renewable business is stabilising and is improving, we will definitely start looking at the Saudi market, but not in the size in which some of our competitors are doing. We do not want to be very big in renewables there, but we will definitely start getting into it.
Hopefully by either Q4 or next year we will definitely have some orders in the renewable business in West Asia. The second part of that is that we have a large T&D (transmission and distribution) order book of more than Rs 11,000 crore in West Asia and many of these orders are related to the evacuation of renewable power… So a large part of our Saudi order book, for example, and many others in West Asia is related to evacuation of renewable energy.
Your debt has gone up in the previous quarter (Q2 of FY26). Should there be any cause for concern?
In absolute terms, debt has gone up by Rs 5-6 crore but our turnover has gone up by 19%. So, when you look at the relative numbers, it has not gone up. Number two, what has happened is that my interest as a percentage of my revenue has come down from 3.4% to 2.9%. So, there has been a 50 basis point reduction in the interest cost on the revenue. We are very confident that by the end of this financial year we will get back to last year’s debt level of around Rs 5,000 crore.
Debt has gone up because of one or two major issues. One is you are aware that in the Jal Jeevan Mission there has been significant payment delays across almost all states. So, we do have a pending amount of almost Rs 800 crore in water business and slowly we are getting payments.
Can you talk about your prospects in T&D business?
I have been in this industry for about 23 years and I have never seen the kind of prospects I am seeing today. It is concentrated in a few pockets. One is clearly India. Second is West Asia: It is basically Saudi Arabia, UAE and to an extent Oman, and now slowly we are seeing Kuwait also coming in. The third piece is America. We have two factories — one in Brazil and Mexico each. We are seeing a lot of demand coming out of Brazil, Mexico and the United States despite whatever is happening there. We are clearly seeing, like India, they also want to strengthen or add up or increase capacity.
In energy-related EPC, especially in renewable space, a lot of companies are coming up and many are getting listed. Is this competition impacting your business in the market?
Most of the companies that you are talking about are in renewables and so on. There the competition has definitely increased, which is why we have been going a little bit calibrated in that industry. But in T&D, because the volumes have gone up and the project sizes are becoming much larger, the competition in that part is significantly better than competition at the lower end. In a Rs 100-200 crore project, there will be 10 to 12 players. The moment you go up to Rs 500- 700 crore project, then the competition would be among 5-6 players. So, it is much more measured. Number two, you are competing with like-minded, like-sized companies. So, the competition is very healthy. It is not where people want to take projects at a zero margin or only for the sake of taking.
Despite the growth of renewable energy, thermal is still the mainstay of mitigating power demand here and the government has recognised that and many companies are looking at setting up plants. How do you look at it ?
The inherent demand of power is going up significantly in India. Most of the people are using renewable to substitute the existing power plants, and so on. I can give a simple example. I did not have an electric vehicle three years back and today I have got two electrical vehicles at home. You look at Mumbai metro and the amount of power which all these metros and others will consume up. In the last three years, we have done four projects to increase power supply to Mumbai. Nothing to do with renewables. One is the renewable part where our Prime Minister is very clear, 500 gigawatts of renewable capacity and now we are talking about 600 GW in 2032. So there is a clear need for setting up both renewable plants and fossil fuel plants and the associated transmission lines for the evacuation.
So you are seeing a lot of opportunities for your company in thermal?
We are clearly seeing that. In fact, one of the orders which we recently got was for setting up a lot of civil work and other structural work for setting up a power plant but that was not a merchant power plant, it was a plant for an aluminium smelter, but it wasn’t complete. But as of today, we have got enquiries from at least 3 or 4 power plants for doing the balance of plant and incidentally also, railway sidings.
