To double revenues from non south zone in FY12: V Guard

In an interview with CNBC-TV18, Mithun Chittilappilly, ED, V Guard Industries spoke about the latest happenings in the company and the road ahead.

He said that the company is expecting to double the revenues coming from the non south areas in the coming financial year. Below is the verbatim transcript of his interview with Reema Tendulkar and Ekta Batra of CNBC-TV18. Also watch the accompanying video. Q: We understand now the strategy of the company is to geographically diversify, focus more on the non south markets. What is the kind of revenue that we can expect from this and also will it have any impact on your margins because of increased marketing spend? A: For the last financial year we did a total revenue in excess of Rs 700 crore which is inline with our expectations. Out of this about Rs 160 crore has come from the non south market. We are expecting to double this revenue in the coming financial year. Definitely, we will be experiencing higher growth in this particular market. Also, because being a new market we would be having increased marketing spend. So, we feel that on the whole the margins from those markets will be less, but on an overall basis we are confident of maintaining an EBITDA of about 10%. Q: Can you just give us a ball park figure for FY12? How much are we expecting in terms of an outflow for marketing and like you said your margins would be then maintained at 10%? A: We usually spend about 4-5% of our revenues on media and marketing spends, that includes both above the line that is elevation and newspapers and below the line that is dealer meet, plumbers meet or electrician meet, those kind of things. So, our spend will be roughly about Rs 36 crore in this financial year. Nalanda Capital bought 2% equity in company: V-Guard Ind Q: Can you tell us about this opportunity you actually see from the non south markets because we are aware that you have a very strong presence in south of India but what is the opportunity that you can see pan India? A: In case of almost all our products we are having a good acceptance. We started marketing it about three years back outside South India. Initially, the brand was not well known, now we are getting great acceptance both from consumers as well as retailers. The opportunities, we are going to experience boom in terms of consumer durables because of increasing salaries and increased new housing demand. So product like fertilizers which move along with consumer durables, products like wires which go for new housing demand, products like fans, water heaters etc, we are expecting good growth in the next few years to come. This is the opportunity we see and we have a good brand name in South. We have a very good after sales setup in South and we have a very good distribution as well. The idea is to replicate whatever success we have had in South in other markets as well.