MIRC Electronics expects to improve margins in FY12

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MIRC Electronics reported net profit of Rs 9.71 crore in quarter ended March 2011 against Rs 5.19 crore YoY. The company's sales rose to Rs 574.31 crore compared to Rs 393.41 crore YoY.

In an interview with CNBC-TV18, Gulu Mirchandani, CMD of MIRC Electronics spoke about the quarterly numbers of the company.

Below is the verbatim transcript of his interview with of CNBC-TV18. Also watch the accompanying video.

Q: Could you now tell us what is the kind of outlook you have for FY12 and any kind of guidance that you have set out with?

A: The quarter went quite well. We had a revenue growth of 45% and a bottomline growth of 87% for the quarter. We expect to grow next year also in the region of 25% next year on our revenue and profit.

Q: One problem with the company historically has been that you all operate in very low volumes. Now that you are saying this kind of volume growth, will there be an uptake on your margin growth in FY12, where would it average at?

A: Yes, margins will improve because our fixed costs will get reduced, so margins are bound to improve for the next year.

Q: What do you think would be the projection? For the full year, FY11, your EBITDA margins stood at 3.8%. Where do you think is the stable state margin?

A: Stable would be marginally more from 4-4.2%.

Q: Are you planning any kind of price hikes in the near-term? We understand that a couple of months ago, are there any other hikes on the annual?

A: We took two price hikes, so I don't think we have any plans for any price hike at the moment.

Q: And what is the volume picture looking like at this point? Some of your peers especially in the cooling segment have been reporting a bit of a dip. Do you think that is also affecting your business?

A: No, in the cooling area we have done we have done rather well, almost a 59% growth. Only April has been a bit slow, but overall we have had a very healthy growth more than 40% on the revenue growth on cooling items.

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Q: In September last year you all have entered the lighting space. Has that contributed to your revenues in FY11?

A: No, we are just developing that stage, so it is in a more development stage. We are not looking at revenues at this quarter also.

Q: And what about in FY12? Will there be any kind of contribution?

A: Yes, there will be in FY12, but for the first quarter there won't be...

Q: How much will it be for the entire year?

A: As I said, we are still at a very initial stage. So I would rather not comment on it at the moment.

Q: Just to understand your margins a bit little further, a lot of your peers operated higher EBITDA margins. What is the reason the company operates at such low EBITDA margins, just 3.5%?

A: I don't know which peers you are referring to, but generally it is a very competitive area and margins in items like colour TV and all are not really growing. Where the margins are growing is ACs. AC is the area where margins we have also been growing in DVD. LCD has gone up, our margins are growing up with LCD.

Q: The cooling segment was the one that I was referring to, what percentage of your sales comes from that segment and do you have any plans to expand that segment?

A: Yes, about 20% of our turnover is coming from that segment. We are growing there pretty rapidly, almost 30-40% is growth every year.

Q: And to increase your exposure to the entire cooling space which is also indicated as high margins, any kind of capex or fund requirements that you will have for this coming year?

A: Not much, we will be spending in the region of about Rs30-50 crore.