Will exceed Rs 300cr in revenue this yr: Kavveri Tele

Kavveri Telecom has informed the Bombay Stock Exchange that a meeting of the board of directors of the company will be held on February 2, 2011, to allot (i) 40 lakhs equity shares to promoters on preferential basis, (ii) 10 lakhs warrants convertible into equity shares to promoters on preferential basis and (iii) 20 lakhs warrants convertible into equity shares to strategic investors / non promoters on preferential basis.

The stock has been up 13-14% in the last 10 or 12 trading sessions. In an interview with CNBC-TV18, C Shiva Kumar Reddy, MD, Kavveri Telecom Products spoke on the preferential allotment and the company's business plans going forward. Below is a verbatim transcript. Also watch the accompanying video. Q: If you can tell us you have a board meeting on the 2nd of February for considering a preferential allotment to promoters. What kind of valuation will this lead to? And also secondly, your stake in the company I believe is about 14.6%. How much will that go to after the preferential allotment? A: This preferential share is for 40 lakh shares for the promoters and 10 lakh warrants to the promoters and 20 lakh warrants to the non promoters. This being raised at Rs 113 a share. This preferential allotment is for acquisitions overseas in Europe as well as in North America. The second question you asked, this will dilute the equity by about 24%. Q: You were telling us that this is a substantial 24% dilution. What kind of expansions that you spoke about, what will they do to your revenues say in FY11 or more importantly in FY12 is I think when they will start kicking in? A: One of the acquisitions should close this quarter. The other one will close in the first quarter of the next financial year. Both these acquisitions should add about USD 45-50 million to the topline. In the first year, they may not be accretive to the bottomline, but going forward, it will be accretive to the bottomline in a large manner. Q: Your margins had gone down by about 6-7% points in Q2. What is the outlook on that front? A: We have reequipped now and Q3, and Q4 will do much better than the Q2 numbers. Q: So what is the kind of revenue increase you are looking at in FY12 or for that matter even in FY11? A: In FY11 we will grow about 30-40% on the topline. Q: You mean the topline? A: Yes topline. And FY12 we should grow much larger because of these new acquisitions will kick in the topline as well as the bottomline. Q: If you could put a number to it. Because I guess you would be doing about Rs 250 crore revenues in the current year or Rs 260 crore? A: Last year we did about Rs 242 crore on a consolidated basis. This year we should do more than Rs 300 crore on a consolidated basis. For next year, we should be much higher. I can't put a number to that. But we should do much higher with the new acquisitions. Q: Is there anything else that is lined up after these two acquisitions or will the money you raised just about meet these acquisition costs? A: The money we raised will meet these acquisition costs, but we have a core focus on further acquisitions in North America and Europe. What do we want to do is acquire this company and move the entire manufacturing to India and make India the global hub of manufacturing for our group companies. Because of the low cost of manufacture in India we want to utilize that and leverage that to get more profits.