See double-digit growth in next few quarters: Nitco Tiles

In an interview with CNBC-TV18, Alok Goel, CEO, Nitco Tiles says, previous year was a very abnormal year for the company. “This is the year of consolidation. Hopefully, we will continue to grow double-digit in the next few quarters,” he adds.

Below is a verbatim transcript of his interview with CNBC-TV18's Ekta Batra and Reema Tendulkar. Also watch the accompanying video.

Q: Your standalone net sales have risen 84% for this quarter, can you just tell us about the volume growth and also the geographic break-up for this quarter in particular?

A: As I shared with you last time after our Q3 financial results, we have focused on expanding our reach across the country. Thanks to the overall construction activity showing reasonable buoyant strength, our volumes have nearly grown up by nearly 75-80% over Q1 and Q2 which is what actually is reflecting in our financial results.

Let me also point out that our previous year was a very abnormal year for us due to factors beyond our control. So, I would actually say that this is the year of consolidation. Hopefully, we will continue to grow double-digit in the next few quarters.

Q: What sort of pricing improvement have you seen? Can you tell us about the export and the domestic break up this time around?

A: Our exports are not very big; it is now about 7%. We are focusing largely on the domestic markets as domestic market itself is showing a very healthy double digit growth. So, we continue to focus on the domestic sector.

Q: Now that you have normalised in terms of your performance, when you speak about double digit, what is the kind of growth that you see, if you could give us a number and also the contribution from real estate in FY12?

A: When I use the word double-digit, I am referring to 16-18% cumulative average growth rate, which is what we are hoping that we will continue to see in the construction industry and therefore in the tiles industry. Real estate, actually we have taken only Rs 20 odd crore this quarter. But about 80% of our Nitco Biz Park is yet to be tied up, which probably would get reflected in the next two-three quarters.

Q: What will be the contribution, could you quantify how much might come by way of a P&L Impact for you all?

A: From real estate, we are expecting this year about Rs 100 crore.

Q: Could you expand on what sort of monetisation we could see from the real estate business? You spoke about that particular park, but any sort of land sale we could expect in FY12?

A: We are looking at various options. It would be a little difficult to put any numbers behind this. But anywhere between Rs 100 to 150 crore is what we are looking at in terms of monetising during FY11-12.

Q: Can you just talk about the land bank which you currently have? Would you be expanding land bank as well?

A: No, we have actually built up a substantial land bank in Alibaug as well as we have large residential plot in Kanjurmarg, Worli and couple of uptowns like Goa. Some of the projects we will be announcing in this financial year. But let us not forget the kinds of things that are happening because of high inflation and the interest rate increase. So, we are actually critically reviewing, whether we should do it in the coming next quarter or wait for a quarter or two more to sort of initiate these projects.

Q: On account of higher raw material pressures, any kind of margins that we might expect? Any debt that you have and any interest cost burden which might show up for the company?

A: I can clearly see that the interest rate is going to adversely affect the real estate sector and is obviously going to put pressure on our margins. But what we are doing is that whatever cost increase is taking place we are trying to pass it on to the market.

Q: A quick word on price passing through with regards to price increases, any sort of price increases on the anvil that we could expect?

A: There are two major cost factors which have happened. One is ofcourse the oil price increase over the last 12 months, which affects our industry very badly both on the freight side as on the manufacturing side. So, that is the cost that we are trying to pass on in the market. The other one is ofcourse because of the interest increase, which ofcourse is not very big, but nevertheless we will have to recover it from the market place.