TIL expects Rs 150-200 cr turnover for FY12

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TIL expects Rs 150-200 cr turnover for FY12

Aloke Banerjee, President and CFO of Tractors India, in an interview with CNBC-TV18's Sonia Shenoy and Latha Venkatesh, gave his perspective of the fourth quarter performance and their divulged future plans.

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Aloke Banerjee, President and CFO of Tractors India  (TIL), in an interview with CNBC-TV18's Sonia Shenoy and Latha Venkatesh, gave his perspective of the fourth quarter performance and their divulged future plans.

Below is the verbatim transcript of the interview. Also watch the accompanying video

Q: How does FY12 look for Tractors India? FY11 hasn't been spectacular. Your PAT growth has been very flat. What are you expecting to do in FY12?

A: The recently announced financial result has to be understood that there are three points to be considered. The first point is that there is a growth on the top-line by almost 30% whether the Indian operations TIL and TIPL or the consolidated group.

Speaking of growth for Indian operations, there has been a significant improvement in terms of sales of the prime product numbers which is in terms of construction mining equipments, we have been able to sell 1181 numbers vis-à-vis 923 for the corresponding year.

For the power systems, we have sold 603 engines in comparison to 502. We have sold 120 cranes as well.

Q: Your net sale is showing 30% higher revenues, but your margins are clearly under pressure. Why were margins under pressure? Will that be the situation in FY12 also that you are able to report 30% higher revenues, but your margins are continuing to show pressure?

A: The margins are under pressure because there has been a lot of investment in terms of human resources. We have done a lot of recruitments which is reflected in the staff cost announced in the papers.

These are investments for the future because the infrastructure space in the Indian context will boom. We need to have the resources in place. In addition to that, we have got certain big orders for which we require the resources.

These certain expenses will not be recurring in nature. We do not expect that every year growth increase, not only in terms of staff cost, but also in terms of other expenses will happen. Therefore, we expect improvements in the margins.

A part of investments has happened in our new plant from where the revenue has still not come. The revenue will come only starting July.

Q: What could be your margins for FY12? Will it slip below 9% level or will you maintain a double digit margin?

A: In the 2009-2010 results, the EBITDA margin had been 12.5%. In the current year, the EBITDA margin has fallen to 10.8%, but has an affect on the number of prime products sold in the market. The intention of the company is to achieve 12.5% margin as we have sold higher number of prime products there.

Q: You mentioned that expansions kick in by July. Can you give us an idea of how much revenue will grow in FY12?

A: In the first year, we expect a turnover between Rs 150-200 crore as it will start in July. In six-seven months' time, it will be full fledged. This will only be a part of the total investment.