JHS Svendgaard Laboratories’ board recently approved part conversion of warrants to 1.02 shares of face value of Rs 10 each.
The conversion has been made in accordance to SEBI guidelines, says Nikhil Nanda, MD of the company. The promoter holding will now go upto 43 percent on full conversion, he adds.
The company is also shifting its focus from being pure contract manufacturers to owing brands, Nanda says. The company will see fair percentage of business coming into own brands in future, he adds.
The company is at 60 percent capacity utilization currently, he says adding that the
company to become profitable in FY17.
Nanda expects 30-35 percent revenue growth in the current fiscal.
Below is the verbatim transcript of Nikhil Nanda’s interview with Reema Tendulkar & Nigel D'Souza on CNBC-TV18.
Nigel: We are talking about news about conversion of warrants that you have done. Could you give us the sense who had converted those warrants because they were issued to promoters as well as non-promoters and if it was promoters who converted then what does it take your promoter stake to?
A: We have got a total warrant issuance of about Rs 3.3 crore out of which Rs 1.2 crore have been converted which is promoters and non promoters both in accordance with the SEBI guidelines allowed by the promoters.
Reema: What will the promoter holding go up by and with this infusion what is the total amount that has been pumped into the company?
A: Promoter holding goes up to 38 percent of the total equity and we get closed to Rs 11 crore in form of the converted stocks. We already had about Rs 5.5 crore from the balance which is the warrant money.
Nigel: So, the promoter holding goes to 38 percent or it goes from 38 percent to around 42 percent?
A: Yes, the promoter holdings goes up to 38 percent currently. It will go up to 43 percent on full conversion.
Nigel: What do you intend to do with this money that has already come in? The last time we chatted you were telling us that you are looking to pare down the debt. Can we see that effective in the first quarter of next year itself? What is your total debt and as a percentage how much will you pare it down?
A: With this money flowing in we would be a debt free company as on March 31st 2016. So, in this current financial year itself we will be totally debt free company. We will have no debt on books whether it is in form of secured or unsecured loan.
Reema: You will still have Rs 2 crore more a warrants which can be converted into shares next year because out of 3.3 you have only converted little more than Rs 1 crore warrants so far. So you will still have more money coming in next year so what are your plans with that?
A: As we have consciously taken a decision to move from a pure contract manufacturing to brand owners also and we have been working on it. We have done a lot of work on building our own brand which is Aquawhite.
Going forward what we should be seeing is that we would have a very fair percentage of business coming in, flowing in from our own brand. This money will be used to build in the brand because fortunately we have a huge capacity available with us which has been built in the last few years.
Nigel: What is your current capacity utilisation?
A: We are closed to 60 percent now.
Nigel: The big problem is you are still a loss making, the last few years though yes your losses have started coming down profit number coming in an FY17?
A: Yes, because as we improve our capacity utilisation we have a huge asset base. We need to churn out production from that asset base. As we go forward we see that happening from our own brand as well as in contract manufacturing business which we have currently with us.
Reema: How soon will you be profitable? Will it take place in the first quarter of FY17 or will it be in the last quarter any sense of the timeline?
A: We are working hard and we are trying to make it as soon as possible. The whole team is on it.
Reema: Any sense of what the FY17 revenues could look like the kind of growth you will enjoy?
A: In the last two years we have grown almost 80-85 percent on revenue basis. If we are able to utilise our capacities and our plans are right we should be at least between 30 -35 percent this year also because our baseline has almost tripled as compared to the last two years.