Bartronics eyes 20% growth in FY12

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Bartronics eyes 20% growth in FY12

Sudhi Rao, managing director and chief operating officer of Bartronics India, says: “The company is planning reorganisation of business as the growth over the last couple of years has been sluggish. In FY12, a major would be on organic growth.”

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Sudhi Rao, managing director and chief operating officer of Bartronics India , says: "The company is planning reorganisation of business as the growth over the last couple of years has been sluggish. In FY12, our major focus would be on organic growth."

The company announced its fourth quarter results on Monday. Its Q4 consolidated net sales surged 10% (YoY) at Rs 292 crore versus Rs 265 crore,as against the previous year. During the same period, the profit after tax (PAT) rose 59% (YoY) at Rs 46 crore versus Rs 29 crore last year. Its EBITDA margin stood at 20.5% versus 24.5%.

Talking about the guidance for the next fiscal, he added that growth of around 20% is expected. "We foresee natural scaling down interest costs," he told CNBC-TV18.

Below is the verbatim transcript of his exclusive interview with CNBC-TV18's Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video.

Q: Take us through this quarter's performance and what kind of volume traction you saw as sales went up 10%?

A: I think this quarter's earnings are in line with our previous quarters, as far as the current financial year is concerned. We had earlier said that we expect to see this year to be flattish. The overall performance, reckoning this financial year, has been a modest about 11% or so. We have clocked in total revenue of around Rs 290 crore in this quarter, which is as per our earlier guidance ending the year at around Rs 906 crore. At the net profit level, we have about Rs 46 crore for the quarter and about Rs 118 crore for the entire financial year. So that's approximately 10-12%.

Q: The board has approved business reorganization based on various verticals. What exactly does that plan entail for Bartronics?

A: We are considering some kind of business reorganization as the growth over the last couple of years has been a bit sluggish. On the basis of our internal analysis, we realized the need to have better focus on our current business verticals. Specifically, we are looking at the traditional businesses getting consolidated within Bartronics Identification Solutions. The MCD or the Municipal Corporation of Delhi, Aapke Dwar project, being converted into another separate subsidiary called Bartronics Citizen Services. This arm will deal with 'Aapke Dwar' and other projects of similar nature.

And, the financial inclusion projects, which is a slightly different model compared to our traditional businesses, would be taken into a separate subsidiary called Bartronics Banking Services. The banking services arm will focus on financial inclusion and other services provided to the banking sector. Over a period of time, we intend to have separate CEOs manning each of these subsidiaries. Of course, formations of subsidiaries are subject to necessary statutory approvals, which we expect to receive over the next 2 or 3 months.

Q: What can you deliver in FY12 based on Rs 900 crore sales and Rs 118 crore of PAT reported this year?

A: We have not given a specific guidance for the next year, but we are expecting growth of around 20%, more on an organic basis compared to the performance of last year. On the basis of subsidization, we would be declaring results vertical wise (Aapke Dwar project and the financial inclusion projects).  These verticals have not posted significant revenues during the past financial year; they are expected to mature during the current fiscal. Going ahead, there is a possibility of fairly steep upside.

Q: You finished FY11 with more than Rs 58 crore on the interest cost side- How much do you want to scale it down in FY12?

A: A natural scaling down would happen during the current year because the term loan component of the total debt of the company is going down to almost 50% of the current levels. So there will be a gradual reduction in terms of the interest outflow.

Q: On the basis of 20% revenue growth forecast-do you think holding on to FY11's margins of 22% would be easy?

A: Yes. At the profit before tax level, the same level can be expected. However, few spikes on both the upside and downside, quarter-on-quarter basis, is likely. For example, reckoning the last four quarters, the fourth quarter has seen a significant drop in operating margins because of additional costs incurred in US operations. These are quarter specific, and a fairly large amount of variation is likely, as far as the PBT percentage is concerned.

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