Will maintain margins at 10-15%: United Phosphorous

Rajju Shroff, the chairman and managing director of United Phosphorous talks to CNBC-TV18 about the company’s earnings performance and what the road ahead looks like from hereon.

Below is an edited transcript of his interview.

Q: Take us through this quarters performance as to what have you done by way of margins at about 17.5% and what the trajectory will look like in the next couple of quarters? Will you be able to maintain your margins at 17-18% levels?

A: It looks like with the new product we can put it but the situation in the world where there is a little bit of doubt even in USA. In India the weather situation isn’t clear. So our plans for faster growth have been a little delayed but in spite of that we will definitely be able to make around 15% growth.

Q: With a 15% revenue growth what would your margins look like? Are there any kinds of indication where they would stand at by the end of the year?

A: At present we cannot talk about the margins but we are bringing down the cost of production, we are cutting down the raw material costs and better source. So we will maintain the same margin at about 10-15% or up to 20% depending on the products.

Q: You have had a higher employee benefit expense that you have had to take into consideration this time around at Rs 206 crore. Is this recurring or is this just a one-off high expense that you have had to bear this quarter?

A: It is only one time.

Q: The last time we spoke with you, you did say that there is room for more acquisitions as well to expand your portfolio and gain access to more markets? What are your plans for the business going forward? Are there any acquisitions one can expect from United Phosphorous may be in the next one year?

A: We are continuously studying the market and the factories in the world and in India and we are negotiating because our company has one advantage over others. When a company is in difficulty, whenever we takeover we are able to turn it around and there are some acquisitions which are almost completed but they get delayed sometimes and we are looking forward to more acquisitions.

Q: About this recent acquisition which you all have done of SD Agchem Europe, a subsidiary of Punjab Chemicals and Crop Protection Limited, could you tell us how much you paid for it and whether it will be EPS accretive in this year?

A: We have not declared how much we have paid but the company is engaged in the production, marketing and selling of crop protection products in the European agrochemicals market. We have a lot of plants in France, Holland and England and for all the production; this company will have a better market sense because this company has a well established marketing network. So Agchem will be very beneficial to our company for increasing our sales in Europe.

Q: How is the funding done for this?

A: There is very little debt but otherwise there is no problem. Funding is within the internal resources.