Hope to break even by Q3: Asahi India Glass

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Hope to break even by Q3: Asahi India Glass

The company will do much better than the last year and should go into the black by Q3, says Sanjay Labroo, its MD and CEO.

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Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » ALSO READ See latest News about Asahi India See previous management interviews See what other Experts & Brokerages are saying about Asahi India Asahi India BSE | NSE 28/05/12 Are Mutual Funds betting on Asahi India?

Sales in the auto glass space have grown by 18% between April and August, Sanjay Labroo, MD and CEO of  Asahi India Glass , said, In an interview to CNBC-TV18, Labroo said that while they took heavy losses last year and in the Q1 of this year, it would do break even by Q3.

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

Q: On the automotive glass space because I believe you still have 80% marketshare, a couple of big marquee clients like Maruti , Mahindra & Mahindra (M&M), Tata Motors , what is the growth prospect there and I believe you would be supplying glass in the second round of Delhi Metro coaches as well, so what sort of volume offtake are you expecting over the next couple of quarters?

A: In the auto, there has been a significant upsurge. If you look at sales growth from April to August, it is almost 18% and in August it was 28% in the passenger car segment. So, it is little unexpected and we did expect sales to go up but not so significantly. I think the momentum is quite strong. We expect the sales to be higher than originally forecasted. There are a lot of new models coming in and that helps us because we have very good new model development capability. About these new businesses like Delhi metro - these are significant technical breakthroughs but the volumes are still small. But these are like businesses that you are seeding for the future.

Q: You spoke about revenues being higher than expected, what kind of revenues are you expecting now for FY10?

A: In the auto side - there is a bit of a divergence here - we are expecting sales growth of maybe close to 18-20%, which is not something we had done when we made the budget for this year. But in the architectural side, which is slightly more than 50% of our business, the story is not that good. There is a lot of pressure on sales and prices, there is still overcapacity, the real estate and construction segment is still much lower than what it was about a year ago. So, overall we don't expect sales to grow by more than 7-8%.

Q: What about the fact that you made a loss in your Q1, was that an extraordinary item, will you be in the black in the current quarter the full year?

A: We will be in the black by Q3 and also for the year. But yes, we did take heavy losses last year and in the Q1 of this year because energy prices, which are the main input cost into making of glass, went up dramatically and we couldn't pass that on into price increases because the markets were weak. The markets are still weak for architectural glass. There is excess capacity and more being added and there have been some newspaper reports which are quite misleading, which state that there is a big demand/supply gap in India where demand is about 3,000 tonne per day and supply is 1,500 tonne per day. The reality is that the demand is about 2,500 per day and the supply is already 3,000 tonne per day and expected to go higher.

So when you take all that I think we will do much better than last year and we should go into the black by Q3.