Ruchi Infra plans to double capacity

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Ruchi Infra plans to double capacity

In an interview with CNBC-TV18, Dinesh Shahra, Managing Director of Ruchi Infra spoke about the latest happenings in his company and sector.

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Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » RELATED NEWS Is Karnataka the new investment hot spot? Poor infrastructure, corruption weigh on Indian economy ALSO READ See latest News about Ruchinfra See previous management interviews See what other Experts & Brokerages are saying about Ruchinfra Ruchinfra BSE | NSE 28/05/12 Are Mutual Funds betting on Ruchinfra?

In an interview with CNBC-TV18, Dinesh Shahra, Managing Director of Ruchi Infra spoke about the latest happenings in his company and sector.

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

Q: You have bought back some foreign currency convertible bonds (FCCBs). How much is still outstanding? When will they convert and what is the conversion price?

A: In February 2007, we have raised USD 40 million. Out of which we have bought back about USD 37 million in last one year. The remaining is about USD 12.5 million. So the company bought this FCCB at a discount of 45% to the book value and got lot of benefits and the conversion price for the remaining is at Rs 40 per share. The period is up to 2012.

Q: How does this reduce your interest cost if any?

A: We got the benefit of 45% and debt from Rs 127 crore which we have bought has reduced by that amount.

Q: Ruchi Infra does storage of edible oils and bulk chemicals. How much in square feet storage space do you own? How much of it is leased out to Ruchi Soya? How do you decide how much should be paid? Is it Rs 10 per square foot or Rs 20 per square foot? How are these things been done on a day-to-day basis?

A: We have about 200,000 tonne of storage capacity in various ports in India and England terminals. Around 40% is leased out to Ruchi Soya and 60% goes to the outside market. We have major customers-petroleum companies, petroleum terminals in Cochin and in Gujarat. We have storage for edible oils and chemicals for Hindustan Lever and others. So on a competitive basis whatever the other customer pays the group company also pays the same rent.

Q: Could you shed some light as to what rates were for leasing out this space last December, What are the rates for leasing out this space this December? Are these variable contracts or fixed contracts? If they are fixed, what is the period of the fixed contract?

A: There are certain customers who go on a yearly basis, certain customers who go on a quarterly basis and some on a month-to-month basis. So in last one year, due to heavy edible oil imports in the country, the rentals have been going up. They have increased from last year to this year almost by 15-20%.

So the medium rate was Rs 80-100 a tonne and now ongoing rate is about Rs 100-125 per tonne on a weighted average across the country. We feel the trend will continue to rise because this space is under shortage and many global companies are looking to get into this area.

We are also looking to expand this 200,000 tonne capacity to almost double by either inorganic acquisition or further expanding the existing terminals.