FY07 topline seen at Rs 200 cr: Bannari Amman Spinning

MD of Bannari Amman Spinning Mills , SV Arumugham says there is not much of a difference between working results of a quarter of 2006 and the comparative quarter of 2005. Whatever the difference, it is because of more of depreciation and less of other income, he says.

Going forward, for FY07, Arumugham expects the company to have a topline of Rs 175-200 crore and an EPS of Rs 17-18.

Excerpts from CNBC – TV18’s exclusive interview with SV Arumugham:

Q: Your net profits have witnessed a slide, but margins were under pressure for Q4 as well as FY06. Is it primarily a cost pressure that you are witnessing because your raw materials as a percentage of salesm had gone up to about 59%?

A: That is right. If one looks at the working results for quarter of 2006 and the comparative quarter of 2005, there is not much of a difference. The difference is due to more of depreciation and less of other income. If one averages it out, then there is an increase in the working results of this quarter as compared to the last quarter.

Q: Going forward, with the kind of surge that we have seen in cotton prices, aren’t you facing pressure on your input costs? If so, how are you trying to hedge yourself for FY07?

A: Cotton prices are not actually going up. It’s almost static, especially in this country. Compared to the previous two years; there is huge production of cotton. We are able to balance the cotton prices in such a way that the margins are definitely not under pressure.

As far as our company is concerned, we went in for an IPO, and as per the IPO programme we are well on schedule. We should be able to make a reasonable return in the coming quarters of 2007 and should be able to do comparatively better in terms of 2008 results.

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