Expect sales of nearly Rs 4000cr by year-end: Surya Roshni

2554 Investors following Surya Roshni. Share this News with them.

0

Like this story, share it with millions of investors on M3

Expect sales of nearly Rs 4000cr by year-end: Surya Roshni

JP Agarwal said that the promoter stake will increase from 29% to 55% post the open offer.

Post your opinion here

 

0

Tweet

Share on Tumblr

Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See latest News about Surya Roshni See previous management interviews See what other Experts & Brokerages are saying about Surya Roshni Surya Roshni BSE | NSE 29/05/12 Are Mutual Funds betting on Surya Roshni?

The promoters of lighting products manufacturer Surya Roshni have made an open offer at Rs 111 a share. Speaking to CNBC-TV18's Udayan Mukherjee, chairman and managing director of the company JP Agarwal said that the promoter stake will increase from 29% to 55% post the offer.

The promoters had subscribed to two rounds of warrant allocations wherein the total investment was at Rs 133 crore. The first tranche of warrants was issued at Rs 59 a share and second tranche was issued at Rs 83 a share. First tranche was partially converted into equity in FY10. Post first tranche of warrants, the promoters' stake was up at 29.1% from 24.1%.

Commenting about the ongoing plans of the company, Agarwal informed, that all capacity expansions in lighting, steel business have been completed. "We expect sales of nearly Rs 4000 crore by end year," he added.

As part of its expansion plans, Surya Roshni spent Rs 224 crore in FY2009 and FY2010. In comparison, the total sales potential of the expanded capacity is Rs 1,000 crore. Post expansion, analysts expect the sales contribution from the lighting division to increase from 29.5% in FY2010 to 33.6% in FY2012E. Lighting division is expected to witness a 32.5% CAGR over FY2010-12E, which is much higher than the estimated 20.5% CAGR for the steel division over the same period.

Below is a verbatim transcript of the interview. Also watch the video.

Q: Why are you making this open offer at Rs 111 per share?

A: Surya management has great confidence in the company. They have put in Rs 132 crore by way of warrants and conversion. Since we need lot of money for increased volume, margin money for working capital, so this money is very handy and very useful, so it was necessary and so we have done it. This will increase our stake from 29% to 55%.

Q: It doesn't look like you will get stock because the current market price is already overshot your open offer, is it a mandatory one or do you actually want to increase your stake to be on 50% and you can look at a higher price creeping acquisition etc?

A: The Sensex is very volatile and the American indices influences India. We have already applied to SEBI and we will be getting an approval and it takes about two months. The offer is open for two months, so the offer is open for about two months and by the time it closes we have lot of things to see but there is not much of difference between the offer price as well as market price. W e will have to take right decision at the right time and we have plenty of time till closure time of the offer.

Q: So you were talking about your business and your faith in the business which is why you are increasing the stake. How is your lightening division growing which is the most exciting part of the business and how much will it contribute by the end of this year to your overall revenues?

A: We have done lot of expansions in the preceding year now and we have expanded in our energy saving lamps, CFL Lamps, we have expanded in floors and tube light that is five star rated lamps which saves 75% of energy. We have also expanded in lighting glass which his Asia's largest glass plant. We have also invested in High Mast and street lighting system. So Surya has done plenty of expansions including PVC pipes.

So far we were making steel pipes and Surya had become GI pipes largest manufacturer, in PVC also we have entered. We hope to double the turnover by the end of next year. We have already completed all our expansions but turnover is going to be achieved and we are going to consolidate. This will help us in increasing our topline as well as bottomline.

Q: Are you saying you could be looking at Rs 4000 crore sales line or topline by end of FY12?

A: Yes, hopefully we will do that.

Q: With what kind of margin and profitability profile?

A: With the increasing turnover and one of our Uttarakhand plant has become 100% income tax exemption. So certainly this will add up to our bottomline also. Every fourth lamp was Surya, now with this increased volume every third lamp will be Surya, so our market share will become 35% in the light source division, lamp division.

In coming 2-3 years we see lot of potential in Surya's growth and we have recently received Rs 100 crore IOCL order for oil and gas sector, single largest order. Similarly high quality PVC Pipe, we have added up in our technology with European technology. So Surya has got a very bright future.