Harsha Chigurupati, director, Granules India, says last year the company reported a major increase in profit due to forex gains of around Rs 8 crore. This year too, the company performed better than previous year. There has been improvement in revenues and the company expects revenues to grow at 30 percent in FY14.
Below is the edited transcript of his interview to CNBC-TV18.
Q: Your net profit is impacted by one-time gain that you had on forex last year. Shaved off that how does the performance look on the bottom-line front and also on the operating profit front?
A: Last year the major increase in profit was due to forex gains of around Rs 8 crore. If we shave off Rs 8 crore from last year then also the performance of last year was ahead compared to the year before that. So, we did relatively better compared to previous year.
Q: What accounted for that improved performance because revenues are flat about Rs 200 crore compared to Rs 188 crore year ago quarter? What boosted the performance?
A: One can easily make out from the number that revenues have grown. There has been a significant increase in our existing capacity and we have utilized ourselves even better.
We are focusing on innovation and operational efficiencies. We have taken our existing assets, worked on the operation efficiencies especially for the APIs and got more product out of it. So our revenue and profitability increased.
Q: How much Gagillapur facility expansion will add to your top line this year?
A: From pure capacity standpoint, capacity enhancement is quite novel and never done before in the world. We have a pure large scale production business model and it is very unique and due to that our infrastructure is quite unique. It gives us efficiency in the way other companies cannot achieve for large scale. We expect revenue to increase by over 30 percent from the previous year.
Q: Thirty percent in terms of revenue growth because of the added capacity?
A: Yes exactly. If revenue is 30 percent, then profitability will be significantly higher than 30 percent. Profitability is not only based on revenue growth it is again based on innovative manufacturing process which will give us efficiency and we also have a better product mix. These are mainly for finished dosages which have better margins.
Q: You get to the high teens in terms of margins because you have been averaging around 13 percent, which has been your best performance so far?
A: EBITDA would be in high teens and significant difference because of two things, better capacity in terms of efficiency and better product mix. Also better dosage more from API granulation to more finished dosages.