Rising input cost to hit margins ahead: OCL India

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Rising input cost to hit margins ahead: OCL India

In an interview with CNBC-TV18, MH Dalmia, President, OCL India, speaks about the results and his outlook for the company.

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Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » RELATED NEWS Buy India Cements; target of Rs 138: Angel Sec ALSO READ See latest News about OCL India See previous management interviews See what other Experts & Brokerages are saying about OCL India OCL India BSE | NSE 31/05/12 Are Mutual Funds betting on OCL India?

OCL India has declared its FY10 results. The company's revenue was at Rs 1522 crore versus Rs 1276 crore.

Its net profit was at Rs 164 crore versus Rs 116 crore.

In an interview with CNBC-TV18, MH Dalmia, President, OCL India, speaks about the results and his outlook for the company.

He says, current margins may not be sustainable with input cost going up. "In this period, we are able to pass on all the cost increases to the market, this will not be feasible in the coming months."

Here is a verbatim transcript of the exclusive interview with MH Dalmia on CNBC-TV18. Also watch the accompanying video.

Q: You said that your Q4 revenues are at Rs 465 crore, that compares with Rs 320 crore a year ago and the net profit is more than double from Rs 23 crore to Rs 55 crore. This is a sizeable jump that you have reported even quarter-on-quarter (QoQ) in your revenues?

A: Rs 465 crore versus Rs 387 crore last quarter.

Q: If I looked at the quarter ago numbers, your revenues were Rs 315 crore, in any case this is a sizeable jump that you have reported, is this because of any expanded capacity or is it all because of higher realisations?

A: Nothing significant on expanded capacity.

Q: So it was entirely because of realisations?

A: Improvement in the performance because the capacity was added and then gradually performance has improved.

Q: Are you now producing to full capacity?

A: Yes and no. In a way we are producing full capacity, but the potential is to go upto almost 5.5 or 6 million tonne for which we will need certain marginal investments. So that we have not yet done. So, although we say that our capacity is 5 point some million tonne, that can only be achieved either if we bring down the certain quality parameters, but that we do not want to do. Therefore if we want to maintain the same quality parameters then we will have to make sizeable investment in order to reach 5.5-6 million tonne.