After Greenply Industries posted a net profit at Rs 22.6 crore against Rs 18 crore year-on-year, joint MD and CEO Saurabh Mittal expects FY14 growth to be in the range of 12-15 percent. He believes rupee depreciation has been positive for the company.
"We should be able to maintain about 13 percent kind of operating margin and should be able to grow the bottom-line to a small extent," he says in an interview to CNBC-TV18
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The company’s net sales were at Rs 480.5 crore against Rs 430.5 crore year-on-year.
Below is the verbatim transcript of Saurabh Mittal's interview on CNBC-TV18
Q: How has the first quarter been?
A: It was a tough quarter, but we registered a growth of about 11.6 percent. Net sales in Q1 were about Rs 480 crore. Profits grew by 25 percent. Net profit was at about Rs 22.5 crore and operating margin was at about Rs 61 crore, up by 7 percent.
Q: How have the individual segments done, plywood, laminates? Where is it that you have seen some growth and some pressure?
A: The plywood business grew by 12.5 percent. Plywood revenues were about Rs 228 crore odd and the laminates business grew by 14 percent, the revenue was about Rs 175 crore. The Medium Density Fibreboard (MDF) business is largely flattish at about 4 percent growth. They were at about 77 percent, so, there has been pressure across all the three segments. Therefore, it will be unfair to say that one business is doing very well.
There has been pressure across all the three segments of the business, but nevertheless we are growing at a faster pace than the industry because of our core advantages of deep distribution and complimentary product portfolio.
Q: What kind of capacity utilisations and realisations have you seen especially at the MDF plant?
A: We utilised about 78 percent odd capacity of MDF plant in Q1. The realisations were broadly flattish and were up by 4-5 percent. So we are at about 78 percent capacity utilisation in the MDF plant.
Q: How is the year shaping up to be? Are you expecting just about a 10 percent growth for the full year or will things get better? What is your guidance for FY14 with respect to sales and margins?
A: We should be able to grow anything between 12-15 percent this year. Rupee depreciation had been part of our business and we are getting new capacities in place for value added products in MDF plant. Those capacities would be on-stream by second half of this year. So, we should be able to grow 12-15 percent this year.
Q: What is your view on the margins?
A: On the margin front, we should be able to maintain about 13 percent kind of operating margin. We should be able to grow the bottom-line to a small extent.
Q: You have been bringing down your debt considerably. What does it currently stand at and what are your plans going forward to pare it down further?
A: The debt currently is at about Rs 650 crore. We will be retiring about Rs 100 crore odd this year, but we will also take on some of debt for the capacity expansions which is happening on the MDF plant and the value addition project which we have at the Rajasthan plant for engineered flooring.
We might also invest into a plant in Myanmar. So overall, for the entire year we should be at the same level. We will have some reductions as well as additions. We should be in the band of Rs 650-660 crore for the year. Because of the rupee depreciations some of our long-term loan has to get revalued, so the loans went up by about Rs 13.5-14 crore on the MDF plant which we will borrow from Europe.