Turbulence in West won't impact us: Flexituff International

Excerpts from Bazaar on CNBC-TV18 Watch the full show »

The initial public offering of Flexituff International, a leading integrated manufacturer of flexible intermediate bulk containers (FIBC), has opened for subscription today.

In an interview to CNBC-TV18, Saurabh Kalani, chief operating officer of Flexituff International Ltd said, the company will not be impacted by the turbulence in the West. "Normally, there is no impact on us, even if the economy slows down a little. Infact, in 08-09, when the economy really slowed down in the West, we still did very well."

Also read: Flexituff International IPO opens for subscription

Below is the edited transcript of his interview on CNBC-TV18 with Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video.

Q: A large part of your revenues actually come from the export markets- Europe and US. Do you see any major threat to revenues from there, the turbulence in the West?

A: No. We are into a very specific product which is tailor made for our customers. It is packaging which is in demand always. Normally, there is no impact on us, even if the economy slows down a little. Infact, in 08-09, when the economy really slowed down in the West, we still did very well.

Q: You saw a big jump in your sales and profits for FY11, but much of that seems to be with relief that you got on interest and depreciation. Infact I believe you have been churning out negative cash flow for last couple of years. What is it that you hope to do in terms of a sustainable growth rate and on your net profits going into the next year?

A: Our basic jump from in the FY11 numbers come from the full year working operation of the Kashipur plant where we spent a considerable amount of capex in 09-10. We got the full year of working in '11 and that is where the jump comes from.

The negative cash flows are basically the capital expenditure which we have been doing in the last three years. We have been expanding quite fast and adding new products. The advantage of that is going to go to the customers. Going forward, whatever capital expenditure we have already done and created is going to drive the growth in future, both on the top-line and bottom-line.

Q: If the big jump in revenues and profits is going to start from this year and next year onwards, why is it that Clearwater Capital is choosing to sell half of their current holding in the company?

A: The fact that they are deciding to stay back shows their confidence in us. It was as per our equity agreement, when they invested, it was part of the agreement that they would divest 50% in the first IPO.