Ballarpur International will see an 8-10 percent growth rate in FY14 on the back of better volumes and pricing, said Yogesh Agarwal, MD and CEO of the company. He saw EBITDA being 21 percent for FY14.
This is the first year FY13-FY14 when the entire vertical integration along with revenue growth will kick in.
MD & CEO
Yogesh Agarwal, MD and CEO of Ballarpur Industries expected the company’s growth rate for FY14 to improve to 8-10 percent on the back of increased pricing and better volumes. Also, since the company had completed most of its investment cycles, there was no additional capital expenditure in the near-term, he added.
Speaking to CNBC-TV18, Agarwal said the weak rupee was a positive for the company's exports but their annual payout of USD 100 million (from the company’s total debt USD 500 million) maybe impacted by the falling currency.
He said that their exports stood at USD 50 million.
In terms of earnings, he expected the earnings before interest, taxes, depreciation and amortisation (EBITDA) for FY14 to be around 21 percent. "The company's interest costs would be financed by the increased EBITDA margins," he said.
Also read: Tips to fight the falling rupee
Below is the edited transcript of his interview to CNBC-TV18.
Q: What does the rupee depreciation do to you? What do you have by way of forex loans and imports and exports? How do they square up? Does it leave you a bit poorer or richer after that fairly steep depreciation?
A: The rupee depreciation; overall it helps us in business. But we do have some dollar loans. If we cut to the business, we compete with Chinese paper in India on coated paper side. So any depreciation on rupee to that extent helps us in domestic pricing because the rupee pricing goes up. So to that extent, it helps us.
We do import some raw material which is much less than as compared to the import parity which we keep on a coated paper. Also, we have export of around USD 50 million from India. That helps us.
We have our Sabah Forest Industries (SFI) operations in Malaysia where any dollar appreciation or ringgit depreciation helps us because we compete with Indonesians there.
So overall, the rupee depreciation helps us. We do have dollar loans and annual payout principle and interest is around 100 million. To that extent, it would dent our bottomline in rupee depreciation.
If you put together the loan and business part; the business part is much more than the loan side and we would gain on rupee depreciation.
Q: Just to clarify, USD 100 million is the dollar loans that you have or is that the amount that you need to pay out in this year?
A: No, that is the amount we need to payout; around USD 75 million would be the principal and around USD 25 million would be the interest component.
Q: What is your total exposure by way of loans?
A: The total exposure would be around USD 500 million or so.
Q: Coming to the business side, what disappoints the street is the revenue growth that has been largely flat. Every quarter, we see it is either a zero or 3 percent growth. Is growth expected to be in the zero to 5 percent mark on the revenue side?
A: Essentially, we sell to the capacity. So whenever the capacity comes in it comes in a stair-step. So you will not see typically a gradual growth. Generally we grow every 2-3 years in a stair-step way.
The year FY13-FY14, we do see a growth of around next year 8-10 percent. It will be driven because of price increases as well as some additional volumes which we are going to get because of more squeezing our assets.
So roughly 9-10 percent growth you can take in the year FY13-FY14.
Ballarpur Ind stock price
On November 27, 2015, Ballarpur Industries closed at Rs 17.75, down Rs 0.25, or 1.39 percent. The 52-week high of the share was Rs 19.58 and the 52-week low was Rs 12.00.
The company's trailing 12-month (TTM) EPS was at Rs 0.19 per share as per the quarter ended September 2015. The stock's price-to-earnings (P/E) ratio was 93.42. The latest book value of the company is Rs 24.57 per share. At current value, the price-to-book value of the company is 0.72.
READ MORE ON Ballarpur International, Yogesh Agarwal, rupee, paper industry, better pricing, increased volumes, growth, EBITDA, expansion plans, capex
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