Foresee over 15% volume growth in FY12: JSL Stainless

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Foresee over 15% volume growth in FY12: JSL Stainless

In an interview with CNBC-TV18, Arvind Parakh, chief financial officer of JSL Stainless spoke about the latest happenings and their future plans.

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Shares of JSL Stainless rallied over 5% in today's trade as the company ramped up its Orissa plant capacity by one million tonne per annum. Its chief financial officer, Arvind Parakh spoke to CNBC-TV18 about the latest happenings and their future plans.

Below is the verbatim transcript of his interview with Reema Tendulkar and Ekta Batra. Also watch the accompanying video. 

Q: Could you tell us how is the capacity ramp-up at Orissa taking place? What does it currently stand at and how much will it go up and by when?

A: As a stainless steel producer, we have about seven hundred eighty thousand tonne per annum capacity at present. This is already operational and in the current year we are ramping up capacity to one million tonne additional at Orissa plant. It is a fully integrated plant. During the current year, we expect a gradual building up this commissioning and facility. We will be about close to 1.7 million tonne of stainless steel in the current financial year.

Q: Could you tell us how much will this add in terms of your revenues in FY12 and FY13 once the entire plant of 1.7 million tonne per annum gets operational?

A: Depending upon the gradual ramping up, it is difficult to predict how much revenue will go up. Definitely, we are expecting a volume growth of 15% or even more. In the next financial year, we expect completion of commissioning and stabilization of our existing one million plant at Orissa. For the next financial year, which is FY12-FY13, we will have fully installed capacity and the revenues will be far better than current.

Q: You spoke about 15-20% volume growth this time around can you just tell us where this growth is coming from?

A: Largely it is a domestic market. Since we are the largest integrated player and our production has improved, we are able to cater to a large domestic requirement. The domestic market is growing a little around between 10% and 11%. We were not able to meet demand coming in from imports.

Once our visa facility comes in, we will be able to cater to a much broader market within domestic market itself. Since this is one of the fastest growing markets in stainless steel globally. So the focus is more on domestic market meeting the entire requirements. Stainless steel as you know is coming up. We see a lot of stainless steel being all around.

Q: What about the margin picture? Nickel comprises of quite a significant amount of raw materials, how are the prices moving and what sort of margin picture are you working with in FY12?

A: In this quarter, we have seen nickel's cost hovering around USD 22,000 to 23,000 a tonne. This has helped in keeping our margins fairly stable as far as the operation is concerned. Overall, I expect the PAT would not show growth but top-line numbers are likely to rise and the raw material cost marginally will go up in the current year.

Q: You spoke about seeing good demand in the domestic space but could you tell us how the export growth might look like because that contributes to 25% of your total revenues how much of a percentage growth can we expect in this fiscal?

A: On the back of increase in volume, we will be able to maintain 20-25% of our total turnover from exports. Exports markets have somewhat recovered, which included the coal drilling unit in Indonesia, value addition and exports to Asian and European markets. We are able to maintain even on an increased base our 20% share of the total sales which will effectively mean that we will be up by at least 10-12% on an overall basis.

Q: Who are your key clients in the domestic market?

A: Practically, we are dealing with everybody. The companies foraying into fabrication work like Larsen and Turbo, BHEL and the capital goods industry. Similarly, even in the real estate space because a lot of stainless steel is getting used in malls, households (kitchens and modular kitchens etc). It goes like this that if there is little bit of stainless steel in everybody's life, so we are practically everywhere.