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Feb 24, 2012, 07.54 PM IST
Demand for both coated and uncoated paper continues to be strong in India, said B Hari Haran, group director of finance of BILT.
Speaking to CNBC-TV18 about the performance of the company, he said, demand for coated and uncoated paper is growing at around 8-10% and 8% respectively.
The paper producer expects topline to grow at 7-7.5% annually . On a consolidated half year basis, margins currently are 17%, which is expected to go up to 19% for the year.
"The pulp mill which is getting commissioned in Sabah will be available for at least four months in this year, that will have an impact on the margins, he added.
Below is the edited transcript of the interview. Also watch the accompanying video.
Q: Can you tell us what the demand picture is looking like at this point? In the last quarter we had have some margin compression. Was that as a result of lower demand or was it cost of raw material that weighed on the margins?
A: Last quarter was an exceptional quarter for us because consolidated results include Malaysian company, Sabah Forest Industries where we are expanding. The plant is shut for two months for commissioning expansion. So, the results are not comparable with the previous quarter.
The demand situation continues to be strong in India. Coated paper is growing at about 8-10% and uncoated is growing at around 8%. We have done expansion in paper, we don’t have stock, so whatever we are producing, we are able to sell. So, demand continues to be very strong.
Q: Generally when you look at the quarterly performance, why is it that last two or three quarters are not as strong as the previous several quarters especially up until June last year 2011. The quarterly performance was on an average better.
A: In the previous quarters, Sabah was running full swing. In this quarter for two months Sabah production was not there, so there is shortfall in the overall operating performance. We have commissioned pulp mill during end of January, so we have expanded capacity by 120,000 tonne. You will start seeing performance getting back in Sabah.
Q: What should we factor in by way of an annual growth? Since you are a June ending company you have two quarters. You have a half year to go. What would the annual sales and margins look like?
A: The annual sales growth would be in the region of about 7-7.5% taking into account what has happened in this quarter. The margins currently on a consolidated half year basis are 17%, you can expect that to go up to 19% for the year. This is because the pulp mill which is getting commissioned in Sabah will be available for at least four months in this year, which will have an impact on the margins.
Q: Any other expansion or capital raising plans hereon now that Sabah would have stabilized?
A: We are expanding the Ballarpur pulp mill which is underway, that will get commissioned in July 2012. After that we will take a break for capex. We have expanded paper capacity and pulp capacity fully integrated. So, 12-13 will be a year where we will not see major capex going forward.
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