FY11 revenues to be 50% more than FY10: Ashapura Minechem

Here is a verbatim transcript of an exclusive interview with Chetan Shah on CNBC-TV18. Also watch the accompanying video.

Q: You have been now allowed to export bauxite now, could you tell us adding the inventory and production how much of it will you be exporting this year? What unit price do you expect to make those exports at?

A: There was some problem for exports at the Government of Gujarat since last one year. They have announced the policy on November 19. Some procedure has to be completed. Hence, we looked at the last quarter of the financial year. We expect exports would be about 1-1.5 million tonne. We are more optimistic about the coming year 2010-11. We expect the total export of bauxite from the state of Gujarat and Maharashtra to be about 5 million tonne.

Q: Your market capital is about Rs 500 crore. You have a memorandum of understanding (MoU) to set up an alumina refinery in Maharashtra and one in Kutch with GMDC. How much money do you require? How do you plan to get that money? Would it be three-four months from now?

A: This alumina refinery in Gujarat is our first project. We are looking at the total investment of about Rs 500 crore. We have already invested Rs 75 crore through completing the basic engineering. There a lot of other requirement for the projects. This project duration is about three years. We believe that our cash flow for the subsequent year will be able to finance this kind of equity.

Q: What margins do you make on your trading activity itself? The bauxite is a very bulky metal and you need four units of Bauxite for two units of alumina and in two units of alumina you get one unit of aluminum. What are the margins when you trade?

A: For bauxite currently we are expecting a price of about USD 25-26. This leaves us at about USD 5-6 gross per metric tonne. There are a lot of other bauxite activities we are doing. We have the calcium and chemical grade bauxite. Their volume is not very big. Today there is an acute shortage for calcium bauxite worldwide for the refractory’s because of the steel industry is growing and that business leaves us very good bottom-line.

Q: This leaves us with an idea of what you might make in FY11 since in FY10 you have only three months to export. What would you do in FY10 and FY11 in terms of revenues and margins?

A: We can see much better year for FY10 and FY11 because this year things were not clear from the government of Gujarat. A lot of issues and problems are faced over the year. The next year should be much better.

Q: Can you put some figures to it?

A: It’s difficult but it will be 40-50% better than what we have done in this current year.

Q: I am still confused about your alumina refinery plans, you said you will need about Rs 500 crore even if I assume you have revenues of about Rs 500 crore or a margin of 10%. How do you fund this? You would not need any additional funding or dilute promoters equity to do this?

A: If necessary we have to do it but our company besides bauxite which is about 60% of company’s business has other 40% business which is very strong like Bentonite. The bleaching clay, Kaoline, Geo-Synthetic clay line and many other businesses are also going to contribute in the bottom-line of the company. We will be very comfortable to meet this because it is not that we have to contribute in as it’s going to be about next three years. It looks like we would be able to meet it.