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Jun 15, 2011, 04.40 PM IST
In an interview with CNBC-TV, Anil Jain, MD, Time Technoplast said the performance of the company has been fairly consistent. He further said he expects 25% organic growth and 35% revenue growth in FY12.
He further said he expects 25% organic growth and 35% revenue growth in FY12.
Below is the transcript of his interview with CNBC-TV18's Latha Venkatesh and Gautam Broker. Also watch the accompanying video.
Q: You operate in the polymer space and the margins there have been strong over the last couple of quarters. What is the outlook going forward? Have you seen further strengthening in polymer prices and are raw materials hurting a bit?
A: The performance of the company has been fairly consistent. We have been maintaining our earnings before interest, taxes, depreciation and amortization (EBITDA) margins over the years. I guess it will continue the same way.
The polymer prices do go up and down in between and in the mean time they have started coming down. But if you look at our track record, we have always been able to pass on the increases to our customers. So that allows us to keep our EBITDA margins fairly stable.
On the other hand, in our key business of industrial packaging, we have a very strong market presence and the market share which allows us the pricing power. Therefore, we maintain our EBITDA margins.
On other products, we have fairly innovative products and passing on the increase of the raw material to our customers has never been a problem.
Q: In your consolidated numbers, your composite product margins were a bit under pressure, how much does this make of your total revenues? Is this pressure likely to continue?
A: The composite material, which is about 20% of our total business, includes our batter business which we had acquired two years ago. It has done consistently well, except for the first half of last year where the EBITDA margins went down but in the second half they recovered. We are continuing to move up on our EBITDA margins. So, I assume that it will continue to be so. Even if there was little bit of dip in composite EBITDA margins in FY11, I am sure we will be fully recovering it in FY12.
Q: Could you give us an idea of your expansion plan? You had spoken of expansion into several South East Asian countries like Indonesia, South Korea, are they on track? What should we expect in terms of revenue growth in the current year?
A: If you look at our history, we have actually been growing organically at about 25%. That is what we exactly did in FY11 as well. So, it will be safe to assume that 25% organic growth will continue.
Last year, we did two acquisitions, which have not participated in the last year’s turnover, that will get consolidated in this year. And that should give us another 10%. So, I think 35% growth is something that we should expect. But the real watershed year would be the next year, as you mentioned we have lots of initiatives taken in the current year which will come in. Hyderabad project has started operating; we are expanding our pressure pipe project.
Overseas, projects in Jakarta, Indonesia, South Korea, Egypt and of course in South of China in Guangzhao would play in Q3 and Q4. But next year their contribution would be significant. So, I am sure that organic growth of 25% and the inorganic growth of 10% that has come from acquisition would be fully there in FY12. And as these new projects start contributing, so for the next two-three years we should be fully well placed in terms of profits.
Q: Are you fully funded for your expansion plans organic? Are you looking at any inorganic growth in this year?
A: We are fairly well placed so far as funds are concerned. We have robust cash flow coming in from our operations. We are still highly under leveraged, so we can always borrow it from the banks. All put together, we should really be able to fund these projects we have on hand. We do not really have any dilution plan or fund raising right now on the anvil. But if we see a major acquisition coming our way, we would be open to that idea. It is very difficult when and if they would happen, but we keep looking for inorganic growth opportunities. So, if that comes in and that too also a significant one then probably we will go for fund raising. Right now, there is nothing on the anvil.
May 21 2013, 13:56
- in Results Boardroom
May 21 2013, 11:05
- in MARKET OUTLOOK