Hanung Toys cuts down capex plan from Rs 720cr to Rs 350cr

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Hanung Toys cuts down capex plan from Rs 720cr to Rs 350cr

Chairman and managing director Ashok Kumar Bansal indicated that the company has cut down its capex plan from Rs 720 crore to Rs 350 crore in last couple of months. However, Bansal feels that the main impact is due to the finance cost.

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Excerpts from Markets Midday on CNBC-TV18 Watch the full show » ALSO READ See latest News about Hanung Toys See previous management interviews See what other Experts & Brokerages are saying about Hanung Toys Hanung Toys BSE | NSE 30/05/12 Are Mutual Funds betting on Hanung Toys?

Hanung Toys and Textiles reported a sales turnover of Rs 302.13 crore versus Rs 274.90 crore (YoY) and a net profit of Rs 23.28 crore versus Rs 30.29 crore (YoY) for the quarter ended September 2011.
 
Chairman and managing director Ashok Kumar Bansal indicated that the company has cut down its capex plan from Rs 720 crore to Rs 350 crore in last couple of months.

However, he further mentioned that the rupee depreciation has marginally helped the company.

Here is the edited transcript of his interview to CNBC-TV18. Also watch the accompanying video.

Q: The rupee depreciation should have helped you both in terms of costs and facing the Chinese competition since the Chinese currency didn't depreciate as much. Did you get any help from the currency?

A: Yes, marginally because our business model is slightly different. Almost 25-30% comes from the domestic market. Our exports in Indian rupees are close to 20% and 30% is our import content.

Almost 75% is naturally hedged. We get marginal benefit on the 25% of our sales. Out of that, we partially do the short-term forwards, when we receive the orders.

Q: What happened on the interest cost front because we have seen quite a spike on your year-on-year basis of 48% to Rs 26 crore? What is the trajectory on that front?

A: Previously, we got the interest subvention of 2%, which the government has withdrawn. During last one year, there have been almost 13-14% interest increases. This is the reason why our interest cost is also increasing.

Business-wise, our operational margins and EBITDA are almost same. The main impact is because of the finance cost. Our profits are down by Rs 7 crore and our interest is up by almost the similar amount.

Q: Last time, you said that you expected a 20% topline growth. Would you stick to that? You had a capex plan of Rs 720 crore for the current year. Will you go through all that, considering the demand looks tepid?

A: Right now, we are growing at a pace close to 10% due to the uncertain situation in Europe and US. We have cut down our capex plan from Rs 720 crore to Rs 350 crore in last couple of months.