See FY12 revenues exceeding Rs 800cr: Sumeet Industries

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See FY12 revenues exceeding Rs 800cr: Sumeet Industries

Sumeet Industries, a manufacturer of polyester and yarn expects FY11 revenues to touch Rs 700 crore. It has guided to an EPS of Rs 10-12 by FY12 as compared to the EPS of Rs 8 that it expects to do in FY11.

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ALSO READ See latest News about Sumeet Ind See previous management interviews See what other Experts & Brokerages are saying about Sumeet Ind Sumeet Ind BSE | NSE 29/05/12 Are Mutual Funds betting on Sumeet Ind?

Surat-based Sumeet Industries, a manufacturer of polyester and yarn, had installed a 1 lakh tonne per annum plant last year. The plant is now working at 100% capacity. Exports, which comprise of 10% of the company's revenue is being seen as a more lucrative line of business.

The company expects FY11 revenues to touch Rs 700 crore. It has guided to an EPS of Rs 10-12 by FY12 as compared to the EPS of Rs 8 that it expects to do in FY11.

In an interview with CNBC-TV18's Reema Tendulkar and Ekta Batra, Shankar Lal Somani, Chairman, Sumeet Industries gave his outlook on business going forward.

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

Q: How is demand shaping up for you all and what is it that you would hope to end the year with in terms of revenue?

A: Last year, we completed the Rs 165 crore expansion plan. By the first and second quarters, we had already seen the growth. In the first quarter our turnover was Rs 168 crore, and EBITDA was Rs 11.23 crore. The second quarter is also higher than the first quarter. So we have achieved close to Rs 350 crore turnover, which means it is double than last year. All the profits and EPS is double than last year. We had achieved in the half year about the same data. Current year turnover will be Rs 700 crore.

Q: What about the margins?

A: Margin currently is at 8%. But at the same time we are in expansion mode. We have Rs 150 crore of extra process. That is completely a value added product. So in the next year that value added product will be commissioned. So this year's profit EPS will be Rs 6 to Rs 8. But next year there will be a jump in profit as well because the value added product is there.

Q: You spoke about FY11 numbers where you could touch around Rs 700 crore. Like you said, that would probably be an 80% to 85% jump on a year-on-year basis. What could we expect in FY12 from you in terms of revenue. You also spoke about EPS, what sort of EPS target would you be working for in FY12?

A: Current year turnover will be Rs 700 crore. Next year will be more than Rs 800 crore. Current year EBITDA is 8% profit margin. But next year it will increase to 12% because we are in the process of installation of a new value added product. Turnover will not increase so fast, but profit will increase very fast. We estimate EPS to be Rs 10 to Rs 12 for next year.

Q: Regarding this growth which you are seeing, this expediential growth you are seeing in FY11 and probably in FY12 as well. Can you just explain to us where exactly this growth is actually coming from for the company and also a breakup on how the domestic and export markets would be doing?

A: We are in textiles - a polyester yarn manufacturing company. Many other companies are doing the same business. But our main point is our cost of production is very less. We are now an exporter in the polyester sector. Earlier we were importers. Now every product is being exported to China also.

China is the biggest market, and we export our products to China as well. Our export is around 7-8% at present. In the next year, we see 20% to 30% exports because export demand is very good and domestic demand is there.

Q: Currently at what utilization are you working at in terms of your capacity and you were referring to those value added products which will be coming onstream. For that are you all planning to increase your capacity or may be make some investments?

A: We have a one lakh tonne plant and we are running at 100% efficiency. But we are manufacturing some low value products at present. In the next year we will produce high value products. So our value addition will be higher. So capacity running will not increase. Today we are running at 95% efficiency and next year we will also run at 95% efficiency. But value added product will be there and so everything will increase very fast.

Q: To come back to your export markets, where you see that also increasing in FY11 as a share of revenues could you just explain to us where exactly, which markets are you targeting and where exactly are you seeing increased growth coming for?

A: We are seeing growth in Egypt, Turkey, some European markets and some growth in the US market as well. Growth is happening in small pockets. We are not concentrating on one market because from all sides we are getting enquiries.

We feel that India is becoming a textile hub and so all other markets are looking for raw materials in India.