See 2% margin growth in FY14: Nectar Lifesciences

Crediting the company's new processes that have led to a reduction in raw material costs, Aryan Goyal, executive director, ED said Nectar Lifesciences is likely to post a growth of 2 percent in their EBITDA margins in FY14. 

The stock rallied nearly 18 percent on Thrusday on the back of positive Q4 numbers. Continuing his bullish stance, he added that one could expect similar robust performance from the company going ahead. Also read: Stick to bluechips; bullish on Tata Motors: Ajay Bodke "These should be the new norms as the volumes to regulated markets and in particular Europe and also to Middle East have started going up from the last quarter. We also worked on improving our processes in active pharmaceutical ingredients (API) which has lead to significant cost reductions. The volumes in exports to regulated markets would go up next year as well," he said in an interview to CNBC-TV18. Below is the edited transcript of Goyal’s interview to CNCB-TV18.  Q: You have seen a phenomenal growth in your bottom line driven by higher margins. Are these new higher margins new norm for your company? A: These should be the new norms as the volumes to regulated markets and in particular Europe and also to Middle East have started going up from the last quarter. We also worked on improving our processes in active pharmaceutical ingredients (API) which has lead to significant cost reductions. The volumes in exports to regulated markets would go up next year as well. So, we should see this to be the new norm. Q: Your finance costs are fairly significant compared to your operational performance. You have got finance costs of close to about Rs 35 crore. Could you give us an update on the debt and what plans with respect to that? A: The long-term debt of the company is around Rs 300 crore. It is all rupee finance. As the volumes in our exports are growing, the dollar numbers are becoming pretty steady. _PAGEBREAK_

Hence, we are working on changing the long-term debt from rupee to external commercial borrowing (ECB) and dollars. We should see the reduction in interest cost as well for the next year. Q: How soon would you be able to convert these into foreign exchange (FX) loans? A: In the long-term loans, about USD 22 million has been recently swapped. State Bank of India has financed that. We are working with couple of other banks for the balance and that should happen soon. Q: There has been a significant fall in the raw material cost which is now down to Rs 233 crore which is also highly benefited your bottom line. Where do you see this stabilising and do you expect perhaps to benefit from falling raw material costs going forward as well? A: It is not just the falling raw material prices. We have worked on certain processes that has led to a significant reduction in our raw material consumption and that has led to higher margins. So, we should see the trend continuing for the year as well. Q: You have managed a growth of about 25 percent in your consolidated revenues in FY13. What’s the run rate for FY14? A: For FY14, we should see a top-line of around Rs 2,000 crore where more than 50 percent is coming from exports. Around Rs 200 crore coming from regulated markets in particular and we should see overall EBITDA improvement of around two percent.