Opto Circuits has declared its fourth quarter results. It has reported a better than expected growth of 88.3% year-on-year in its consolidated profit after tax of Rs 209 crore.
The company’s consolidated net sales went up 21.76% to Rs 663 crore in the quarter ended March 2012 as against Rs 544.5 crore in a year ago period.
In an interview to CNBC-TV18, V Bhaskar, head of finance of Opto Circuits says, he expects 20% revenue growth in FY13. "We would see the invasive segment growing a little faster than the non-invasive segment because the base of the invasive segment is much lower," he adds.
Below is the edited transcript of his interview with CNBC-TV18's Sonia Shenoy and Ekta Batra. Also watch the accompanying video.
Q: It’s been a steady growth profile that you have seen in this quarter gone by. Can you maintain this revenue growth of 20% through the course of FY13? If yes, what are your targets within the invasive and the non-invasive segments in terms of revenue growth?
A: The growth should be in the same range about 20% YoY. We expect that to happen because of the new product launches that are happening in both the invasive and the non-invasive segments. We would see the invasive segment growing a little faster than the non-invasive segment because the base of the invasive segment is much lower.
Q: What we can expect with respect to your operating margins? In Q4, your operating margins came in at close to about 22%, which is the lowest in past three sequential quarters. Where do you expect that to be in FY13?
A: I would expect the sequential numbers to be around the same range. The Cardiac Science acquisition is getting completed. The numbers are getting better. But then you will see these numbers getting better in the subsequent quarters.
Q: In terms of getting better, what are you hoping to do in terms of FY13 margins? You have completed FY12 with margins of about 26%. Is there a possibility that it could go to 27-28% or are you seeing more than that?
A: Yes, definitely it will improve by a couple of percentage points. We are doing a lot of things as far as the manufacturing is concerned and the cost cutting exercises are done. Economies of scale will kick in now because more and more manufacturing is moving through centers that are less expensive than where we are producing right now.
Q: You had a tax credit as well in this quarter. What can we assume to be a tax rate in FY13?
A: The effective tax rate will continue to be between 5-7%. We have tax free zones. We are operating out of tax free zones in India and in Malaysia. So, we would say the tax rates would remain between 5% and 7% for year ‘13.
Q: One concern that the investor community has had for a while about your company is the high working capital that the company has been sitting with. How have you done this quarter in terms of an improvement? What are you expecting to see in terms of your operating cycle going ahead?
A: We have shaved off almost 15-16% from the working capital base for this year. The total cycle has improved quite substantially. We see it improving going forward because we are now producing closer to the markets in which we operate.
Q: Is there a possible induction of a strategic partner for your stents business going forward? Is that something which the company is working towards and we can expect?
A: We have been working with some people. This is a long drawn out process. But we expect that it could happen in the FY13. We expect that we will be tying up with companies outside India for promoting our products and joint venture kind of opportunities.
Q: Would that be in the first half or the second half of FY13?
A: Possibly in the second half.
Q: You had incurred capex of about Rs 330 crore, if I am not wrong, in FY12. What’s the plan for FY13? How much have you lined up and what will it be used for?
A: The capex for last year was about USD 50 million in the plant and machinery and the rest of intangible capitalisation. I would expect similarly a USD 50 million investment in the coming year also, especially since we are setting up facilities in Malaysia and in India.