See topline around Rs 1200cr in Q2: Jindal Saw

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See topline around Rs 1200cr in Q2: Jindal Saw

In an interview to CNBC-TV18, Indresh Batra, MD, Jindal Saw Ltd said, second quarter would be more or less the reflection of the first quarter. “It will be very baseline, about Rs 1,200 crore top-line with about 16% earnings before interest, taxes, depreciation and amortization (EBITDA) margins."

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Excerpts from Markets Midday on CNBC-TV18 Watch the full show » ALSO READ See latest News about Jindal Saw See previous management interviews See what other Experts & Brokerages are saying about Jindal Saw Jindal Saw BSE | NSE 29/05/12 Are Mutual Funds betting on Jindal Saw?

In an interview to CNBC-TV18, Indresh Batra, MD, Jindal Saw Ltd said, quarter 1 results were quite baseline. "Our margins, at the operating level, were under pressure, given the very strong commodity prices," he added.

According to him, second quarter would be more or less the reflection of the first quarter. "It will be very baseline, about Rs 1,200 crore top-line with about 16% earnings before interest, taxes, depreciation and amortization (EBITDA) margins."

Below is the edited transcript of his interview with CNBC-TV18's Latha Venkatesh and Reema Tendulkar. Also watch the accompanying video.

Q: How is the business looking? The saw pipe's business would be seriously tied to the capex cycle. You have about 52% sales internationally, 48% domestically. How is the order book looking? What has been the improvement in the current quarter itself?

A: In the current quarter, quarter 1, results were quite baseline. We had a production which was quite high, but our sales numbers were about close to 200,000 tones.

Our margins, at the operating level, were under pressure, given the very strong commodity prices, specifically the coal, which we used for our ductile pipe making, had led to our lower EBITDA margins.

In terms of our sales profile, about half the sales originate from overseas, but our geographical markets for our products are different for different products. Our large diameter oil and gas pipe gets sold in Middle East, about 100% of that where the markets are pretty strong, given the fact that the oil and gas utility companies are held by the government in Saudi Arabia or Iraq or Iran. So, there is no slowdown there. The order book is pretty robust from there.

In terms of our seamless pipe, they were the very profitable business for us which nearly 50% of it gets sold in North American market. The Shale Gas discovery and a reasonably large cap expend on discovery and development of Shale Gas reserves led to a good demand for our products.

Ductile iron is primarily sold in the domestic market. Because of the strong input cost pricing, the margins were under pressure. In terms of order book, it was close to USD 900 million, which we would execute till March.

Q: Will your margin see an improvement in the current quarter from Q1 levels? What is the expectation in the second half?

A: Since these are longer cycle where your commodity prices are booked and your sales is booked, I would think that our second quarter would be more or less the reflection of our first quarter. It will be very baseline, about Rs 1,200 crore top-line with about 16% EBITDA margins.

But from third or fourth quarter, fourth quarter specifically when our mining gets into play, I think there would be a substantial EBITDA improvement. Also, our capacity on ductile iron pipe side in Abudhabi and Mundra gets commission. Collectively this should have a large impact on our profitability as well as the top-line.