Sumeet Industries eyes Rs 32 crore PAT for FY11

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Sumeet Industries eyes Rs 32 crore PAT for FY11

In an interview with CNBC-TV18, Shankar Lal Somani, Chairman, Sumeet Industries spoke about the results and his outlook for the company.

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In an interview with CNBC-TV18, Shankar Lal Somani, Chairman, Sumeet Industries spoke about the results and his outlook for the company.

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

Q: When we had spoken to you the last time, you had indicated for FY11 you would do a margin of about 8% but in Q1 and Q2 at operating levels your margins are lower than that. Do you still hold that guidance of 8% on your margins and what about the entire revenue picture?

A: Our half yearly results are as per our expectations because coming to the total year's margins they are slightly less than annual expectations because we had completed our expansion program in March. The first quarter we saw a good result. The second quarter was better than the first and I hope in the next two quarters we improve on our production, profitability and percentage wise also.

Q: The last time you spoke with us you said you do around Rs 700 crore on your topline but you didn't tell us what you do on your bottomline. You have done around Rs 13 crore for the first half the year and that's actually surpassed your entire FY10 profit of around Rs 10.8 crore. What are you expecting for the full year in terms of profit?

A: In the current year I expect more than Rs 32 crore profit after tax (PAT). Annually, our PAT will be more than Rs 32 crore and capital will be Rs 40 crore. Our EPS will be 8. At present it is approximately 6 or 6.5 annualized.

Q: You all just concluded a board meeting where you all discussed the progress of your expansion plans of POY and also your FDY capacity. What came out of there?

A: Our Rs 135 crore expansion program is inline. We had already booked all the machinery. We have started construction. So this plant is especially for value added product only. At present, we are producing 300 tonne per day but 50% production is low value production.

So value added product we are putting in POY and FDY. We are selling polyester chips at present. In place of chips we will sell POY and FDY. It is more than Rs 120 crore value addition out of which I expect Rs 40 crore extra profit for the company. So next year EPS must be 12 to 14. So this is a value added product.