Confident on FCCB's redemption in FY13: Sintex Industries

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Confident on FCCB's redemption in FY13: Sintex Industries

With underlying concerns on outstanding FCCBs, Sintex Industries is all set bring it up for redemption in FY13. In an interview to CNBC-TV18, Sunil Kanojia, group president of the company believes though the market is battered now, the time span to FY13 will be long enough.

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With underlying concerns on outstanding FCCBs, Sintex Industries is all set bring it up for redemption in FY13. In an interview to CNBC-TV18, Sunil Kanojia, group president of the company believes though the market is battered now, the time span to FY13 will be long enough.

"The present situation will not continue for next two years," says Kanojia, adding that the free cash flow available and cash on hand will help in honouring the commitment.

Further on the renegotiated terms on the conversion price for the FCCBs, he adds, "The trigger price today is Rs 247, along with whatever yield to maturity (YTM) for each year which is about 5.3% or so."

Below is an edited transcript of Sunil Kanojia's interview to CNBC-TV18. Also watch the accompanying video.

Q: There have been concerns on the outstanding FCCBs, which are likely to come up for redemption in FY13. Is it worrying that you begun covering for that redemption?

A: It is coming in FY13 and hence, the time span available is long enough. The market is battered as of today but I don't think this situation will continue for next two years. When you look at the balance sheet, they are very strong with about Rs 1,300 crore of cash and besides, company is already making free cash flow positive. Considering that there will be free cash flow available as well as the cash on hand that is available in the balance sheet, I think we'll be able to honour our commitments. Under worst possible scenario, we have to pay the FCCB, but we are working towards getting it converted.

Q: What are the new renegotiated terms, the conversion price for the FCCBs?

A: The trigger price today is Rs 247, along with whatever yield to maturity (YTM) for each year which is about 5.3% or so. Therefore, Rs 247 is the trigger price.

Q: Could you tell us what is the debt position on the balance sheet?

A: We have a gross debt of Rs 2,650 crore with Rs 1,300 crore of cash. Out of the Rs 2,650 crore, Rs 750 - 800 crore will be the working capital. The long-term debt therefore is too low

Q: What kind of an exposure do you have to various currencies and how does the volatility right now impact your balance sheet?

A: As far as we are concerned, our exposure to foreign exchange remains neutral. The only risk that will remain for foreign exchange exposure is the translation -whenever you translate your numbers of subsidiaries into balance sheet of Sintex at that time depending on the rate.

I don't think the company is exposed to any foreign exchange risk other than the translation, which as per rules; you have to just take it on the particular day when you are translating it. However, there is not much we can do about it.

Q: Can you reiterate your guidance?

A: It is between 25-30% of growth.

Q: Do you think margins will also sustain in the current fiscal?

A: The margins will be about 25-30%. If it is 25% to 27% top line, then margin growth should be at 28% to 30%. Hence, at least a percent improvement in the margin should take place.