Ester Industries eyes Rs 950-1000cr revenue in FY12

In an interview with CNBC-TV18, Arvind Singhania, CMD, Ester Industries, spoke about the results and his outlook for the company.

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

Q: What sort of prices hikes you are possibly taking and how, in order to negate that impact of the crude, which you are possibly seeing on your margins?

A: We may not see a price hike in the prices of polyester film because the prices of polyester film had gone very high during the last calendar, especially in the quarter ended December. The margin increase was phenomenal because of a very robust demand globally. So, we may not see a price hike in polyester going forward. The raw material price increase, which has taken place up to now, seems to have stabilised. So, we don't expect raw materials to move up substantially going forward.

Q: I understand you have a very robust FY11 expectation in terms of your revenues, are you looking to near about Rs 720 crore this year? What will FY12 look like then?

A: Revenues for FY11 should be close to about Rs 700 crore. The revenues for FY12 will be closer to about a Rs 1,000 crore between Rs 950-1,000 crore.

Q: And since you do get a good part of your revenues from the exports segments, how is the export market looking like? Is that the one, which is actually contributing to this up move?

A: We have expanded capacity in January. We have doubled our capacity from 30,000 tonne to 60,000 tonne of polyester film, which is our main business. A substantial portion of this will be going for export going forward. We have commissioned a plant in the middle of January and you will see the main effect of this expansion coming in FY12.

Q: For this new plant, which you have commissioned, what capacity is it running at currently? What is your expectation of possibly internal targets that you are working with in terms of may even six months down the line?

A: We have already reached to about 65-70% capacity utilisation in less than two months of start up. Hopefully, by the end of March, we should be near 90% or may be even possibly a 100%. We expect to have 100% capacity utilisation for the whole of the next financial year.

Q: Any more capex you have lined up at all?

A: Not for the time being, we have just commissioned this one. We have got small capexes in terms of the some downstream value added products, which we are looking at, some which we had already commissioned. In fact, we had also more than doubled our metalising capacity from 6,000 to 13,000 tonne, which was commissioned in November last year. So, there is not a whole lot of capex for FY11, FY12.

Q: Generally, any price hike always takes place for the lag effect, for Q4 perhaps what would your margins look like?

A: The margins on a particular per kilo basis will come down because like I said the margins in Q3 of a FY11 were extremely high, they were abnormal margins. The prices of polyester film went as high as Rs 220-Rs 225 and very little increase in raw material cost. But these margins are expected to reduce because there was a demand-supply imbalance in the last year, in the last calendar.

This demand-supply imbalance is going to get corrected over a period of time, over the next 12-18 months with new capacity coming up. So, we expect the per kilo margin to come down. A lot of this will be mitigated with this increase in capacity that we have done. So, we expect a very strong financial year 12 as well.