Astec LifeSciences to start a project in Q3FY11

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In an interview with CNBC-TV18, Ashok Hiremath, Chairman and Managing Director of Astec LifeSciences , spoke about the company and its expansion plans.

Here is a verbatim transcript of an exclusive interview with Ashok Hirema on CNBC-TV18. Also watch the accompanying video.

Q: What will you do in terms of revenues and profits in fiscal year 2011?
A: Our project is going to be up in the third quarter of the next financial year. Therefore, we are not going to see full effect of the expansion programme in the next financial year. So we would do Rs 150 crore in 2010-11.

However, when we take the full impact of expansion into account, we see revenue of about Rs 220 crore in 2011-12, with a PAT of about Rs 26 crore. We should be looking at an earning per share (EPS) of about Rs 15-16 for that financial year.

Q: What about fiscal year 2011? On Rs 150 crore base, what would you do in terms of profits and EPS?
A: We have expected a profit of Rs 19-20 crore, which would give us EPS between Rs 11-12. However, this is considering only three months of effect of the expansion capacity. So most of it is organic growth combined with little bit of effect from expansion.

Q: Could you detail what exactly this expansion involves because you haven't placed orders which would involve the capex?
A: This is going to be used for expansion of existing products and for the introduction of new products. We are also going to invest Rs 2.5 crore in expanding our research and development (R&D) facility. We are also going to invest Rs 3.8 crore on obtaining new registrations, which gives us more increased  market action in parts of the world.

Amount worth Rs 11 crore will be used towards meeting our long-term working capital requirements. So we have a multi-prong attack which in terms of increasing our manufacturing capability but also our market access.

Q: How much of this Rs 150 crore sales target is dependent on business that you get from Syngenta that is your biggest client?
A: Last year, Syngenta accounted for about 15% of our sales. This year, it's around 25% of our sales. So our business with Syngenta is growing. Apart from that, we are also in negotiations. In our customer base, we have five out of the top 15 agro chemical companies in the world.

This business is growing. We are also in dialogue with number of multinationals for various projects which is going to increase the revenues to them. So we are going to have a diverse customer base but a very high quality customer base going forward.

Q: How much of this Rs 150 crore revenue do you expect to come from the pharmaceutical business which contributes only about 15% today of total revenues?
A: The ratio of 85:15 will continue to be there because both the segments will grow in the same proportion.