Current debt stands at Rs 220cr: Servalakshmi

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Current debt stands at Rs 220cr: Servalakshmi

In an interview with CNBC-TV18, R Ramswamy, chairman and managing director of Servalakshmi, spoke about the company’s IPO plans and the road ahead.

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Servalakshmi BSE | NSE 23/05/12 Are Mutual Funds betting on Servalakshmi?

In an interview with CNBC-TV18, R Ramswamy, chairman and managing director of Servalakshmi , spoke about the company's IPO plans and the road ahead.

Below is a verbatim transcript of the interview. Also watch the video.

Q: You are looking to raise around Rs 60 crore from this IPO. How do you plan to utilize this capital?

A: This IPO is going for converting the finished paper into other varieties like computer printouts, Xerox copy paper and increasing the productivity from the existing level to higher level.

Q: Your Company has a two phase project that is currently in progress. Can you tell when the first phase was completed and what's the capacity you hope to achieve from this paper mill plant?

A: The insulation of the plant was completed in April 2010 and we started the trial production and the stabilization and then we achieved almost 55-60% by 2011 productivity wise and quality wise we are able to achieve the quality which is acceptable to the foreign markets, we already started exporting 22-27%.

Q: In your filing to the regulator you have outlined only for first seven month numbers since only phase one is operational by the end of this year. If you can share what you have done in terms of the topline, bottomline. What are you expectations?

A: On October 2010, we are able to get the earning before depreciation and interest was about Rs 2.3 crore and we achieved a turnover of Rs 52.2 crore and March we already achieved Rs 102 crore sales and the production level we have achieved 60-65%. Since we have introduced a lot of latest technologies like POM Technology and intelligent Motor Control Centres (MCC), process has been stabilized and we are able to achieve 50-60% production capacity.

Q: So once phase two becomes operational, how do you expect your production and sales to go up in FY12?

A: We are planning to increase our production and sales also. By 2012 March, I think we will be able to achieve 70-80 % of our installed capacity and EBITDA will be around 19% and 2013 we anticipate that we will be able to achieve 85,000-90,000 tonne and we will be able to achieve the EBITDA around 19-21%.

Q: Your exports seems to be doing very well. It's one of your growth drivers. Can you explain what kind of export realizations you get?

A: Export at present we are able to get a better realization rather than the Indian market and we are exporting newsprint as well as writing and printing paper also.

Q: Can you tell us what your current debt levels are?

A: Debt at the moment is Rs 220 crore and equity is Rs 60 crore to complete the project of Rs 280 crore and when we go public the Rs 60 crore and plus Rs 60 crore debt equity will become 1:2.

Q: By when do you expect to pare down this Rs 220 crore. What would be the timeline to reduce your debt equity?

A: At the moment we are concentrating on stabilizing the production and then also stabilize the marketing then we will be planning for further action.

Q: You have good competition from bigger peers. They have greater pricing power, so how do you compete?

A: We have to design the market, production level and all depending upon the market. If the newsprint price realization is better, the percentage of production of newsprint will be more and writing and printing grades will be little bit less but at the same time it all depends upon our margins from the sales and the production.