UPS biz sale proceeds to be alloted to solar: Numeric Power

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Managing director of Numeric Power Systems , R Chellappan tells CNBC-TV18 that the sale proceeds of their UPS business will immediately get allocated to their solar energy programme. "Solar is the nest major activity for the company going forward," he said.

Legrand Group signed definitive agreements with Numeric to acquire the UPS business of Numeric in India and Sri Lanka for a purchase consideration of Rs 806.5 crore.

Going forward, Chellappan sees close to Rs 100 crore revenues from non-UPS activities, which will be about 25% of their revenues. "Earlier it was 100% from the UPS business," he said.

Below is an edited transcript of his interview with Latha Venkatesh and Gautam Broker. Also watch the accompanying video.

Q: Can you take us through what you have decided in terms of how you will share the money you have with the minority shareholders who just recently entered your stock?

A: The sale proceeds from our UPS division is going to be received in the company and we have plans to allocate the funds properly in solar energy programme because it is a major activity going forward for Numeric Power Systems Limited.

We have multi various steels already; if you may have noticed we have Amex Alloys, a leading steel foundry today in Coimbatore supplying special grade stainless steel castings and alloy steel castings for Germany and most of the other countries. Numeric owns another foundry called Amex Irons Private Ltd which is graphite iron and grey iron products which is servicing quite a bit of auto and infra industry. So with the company bandwidth of steel foundry products, we have an extensive range of solar products.

Q: Can you tell us what was the contribution to revenues from the UPS unit that you are selling off and what is the contribution of the balance units that you are talking about? What really have you sold off in terms of share of revenues?

A: If you look at the revenue PAT in the last four years, it used to be 100% from UPS services and 0% from other avenues which moved due to our expansion into solar field. It is now 5% from solar and the balance coming from the UPS which significantly moved last year thanks to the new product lines.

Today we expect at least 25% of the top line coming from non UPS activities and nearly 75-80% coming from UPS industry. So once the UPS revenue goes out to the new management, it's going to be at least about close to Rs 100 crore the non UPS activity that will stay with the company.

Q: Is there any plan to give out something the shareholders in the form of a special dividend or any kind of return method that the original shareholder who invested for the core business get something out of what you have sold?

A: Certainly. We recognize UPS as the core business, but at the same time solar is going to be another major area. So from the core business stand point, immediately solar will substitute that. There are no worries about that and the company is totally geared up for that.

Q: So you are not planning to give any special dividend?

A: Most important is the share holder values. We have been a dividend paying company from day one of our incorporation and we respect it and we continue to do that, there is no doubt about it. We look at a special dividend subject to the postal ballet approval, share holder approval and then the subsequent EGM and board meetings that are to follow in the coming weeks. Suddenly if everything is approved and clear we are ready to declare some special dividends.

Q: Can you give us some idea of what you will return to shareholders?

A: First is every shareholder has the option to look at and realize their share value because it is open trading and everyone has the right to realize what they want. It is very important for us as a company we respect investors always so we will definitely sharing the proceeds to an extent as approved by the board by way of special dividend.

Q: After the UPS system goes out in FY13, what will your revenues be?

A: Certainly it is Rs 100 crore plus that is no doubt about it. When we started UPS industry, the first year turnover was Rs 15 lakhs with limited resources, limited technology backup and the conditions 27 years back. From Rs 15 lakhs we could take it to Rs 500- Rs 600 crore today.

When we have so much of advancement around us, business experience and so many global opportunities, starting from 100 upward is not a big challenge.

Q: Will you be a profit making company in FY13 after the UPS system goes out?

A: Very much. Even today we have carved out finance. For the transaction purpose we have to carve out UPS and non UPS. The non UPS entity today is profitable.