Sujana Tower eyes Rs 650-700cr topline from Guwahati unit

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In an interview with CNBC-TV18, Kamesh Yalamarty, MD, Sujana Tower spoke about the company's expansion and fund raising plans.

Hyderabad-based Sujana Tower is planning to set up a tower manufacturing facility at Guwahati in Assam. 

"We are looking for an investment of about Rs 300 crore in this project. We are hopeful that we should be able to ground this project in the next 12-15 months," he said.

"The Assam project has one lakh tonnes installed capacity and will give us a topline of Rs 650-700 crore going under current market price," he added.

The company is looking at a very conservative debt-equity ratio. He said that, the debt component wil be very low at about 33-34%, and the balance would be funded from the internal accruals.

Below is the vernatim transcript of Yalamarty's interview with Gautam Broker and Sonia Shenoy of CNBC-TV18. Also watch the accompanying video.

Q: Could you tell us about your plans for the new tower facility and what kind of investments you are looking to make in that facility going forward?

A: Sujana is planning to consolidate on its superior position as of date. We want to have a very large footprint either in the domestic markets or in the global markets. So, in order to achieve the first runner advantage and supremacy in the North East area, which is having very great priority on the power for the country; we are planning to establish a unit there with an initial capacity of about one lakh metric tonnes.

This would be an integrated plant where we would be manufacturing our own sections till the finished product like telecommunication towers, transmission towers and technological structures so on and so forth. As the ballpark figures go, we are looking for an investment of about Rs 300 crore in this project. We are hopeful that we should be able to ground this project in the next 12-15 months.

This project is going to give us foothold in the North East area apart from targeting certain areas in West Bengal, Madhya Pradesh, Nepal and Bhutan. This is going to be a regional one and this is part of two- three facilities, we are looking all over the region

Q: Could you tell us more about how you plan to fund this project, this Rs 300 crore, how much of it will be debt, how much of it will be equity? Could you give us some numbers on what kind of business potential you are expecting to see and in which financial year?

A: We are looking at a very conservative debt-equity ratio. As things stand today even though we have not finalized, the debt component is going to be very low at about 33-34%, and we want to fund the balance from the internal accruals.

We are on a strong wicket as far as the internal accruals are concerned and we would like to leverage it. Traditionally, Sujana Towers debt gearing is very less. Even today we don't carry any huge debt on our balances sheet except a marginal debt.

Q: You have an approval to raise upto Rs 450 crore via equity through various instruments. Are you looking to raise any equity and also what is your debt level currently at?

A: We are looking at a bouquet of options as to which option is going to be the best one for the company in the long-run. As of now it's an enabling resolution which has been passed.

We are working with various agencies as to arrive at which is the best possible investment mix that company can invite. So, that is at the drawing board stage as of now. We will be finalizing those plans in the next quarter.

Q: Could you give us any kind of revenue run rate that you plan to clock, you are sitting on a base of somewhere around Rs 330 crore in terms of revenue and on PAT around Rs 15 crores or so, could you tell us what traction can you maintain, how much of a percentage growth can we see?

A: The Assam project which has one lakh tonnes installed capacity and it will give us a top line of Rs 650-700 crore going under current market price. If we are expecting in the first year of operation, we will be having about 50% of the capacity utilization. So, this should help us to add about Rs 300-350 crore per annum.

Since we are carrying a very healthy order book, even though, I cannot divulge the exact numbers before going to stock exchange, I can only say  we are looking for a very good growth in the coming year definitely more than 25-30%. This is because of the diversification, we have gone into EPC and various other valued added activities in the company.

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