Raising money to set up South India plant: Blue Bird

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CMD of Blue Bird, Nitin Sontakke says that they are raising money to put up a new plant in South India and also increasing capacities in their Pune plant.

He also says that they have deep penetration in rural, semi-urban and urban areas and that is proving to be advantageous.

Excerpts from CNBC - TV18's exclusive interview with Nitin Sontakke:

Q: Tell us a little bit about why you are raising the money and what you plan to do with it?

A: Our company is basically in notebook production. We are manufacturers of notebooks. We simultaneously publish and print. Now we are raising money to put up a new plant in South India and also increasing capacities in our present Pune plant

Q: How big is the notebook market right now? How fast is it growing annually and what kind of market share do you have?

A: According to ACNielsen report this market is very huge. It is Rs 5100 crore at present and growing at the rate of 20% every year.

Q: What market share do you have in that and how much of your sales come in from the institutional segment and from the retail segment?

A: This market is a fragmented market. Very few organized players are there. We are one of the organized players. Unorganized players percentage is 80% whereas organized players are 15%. We are among the organized players with 48% shares of our organized market and calculating reverse back it is 7% of the whole market.

Q: What sort of market share do you hope to gain by the end of FY08 and what sort of margins are you functioning at right now?

A:  At present we are functioning at EBITDA level 13.20%

Q: Do you have any pricing power at all in this market which has got 80% unorganized presence. Usually pricing tends to be a big issue and organized players are not able to do much with pricing increases, do you face that problem as well?

A: Blue Bird India is able to do it because of our deep penetration in rural, semi urban and urban areas and with quality.

Q: How much do you get from the export market as well in terms of revenues for your company?

A: We started exports just last year, so our exports are very low. It is 2% of our sales.

Q: You did Rs 400 crore of sales in FY06, how much are you likely to do in FY07?

A: Current year by September we have completed sales of Rs 237 crore.

Q: So is it likely that you will top Rs 500 crore in sales this year?

A: The trend will be continued.

Q: In terms of your net profit what do you think you might deliver by the end of this financial year?

A: In September our net profit was around Rs 15 crore and 30 lakhs and the same trend will be continued.