In an interview to CNBC-TV18, Sunil Kanojia, group president of Sintex Industries said, the company is on track to achieve 25-30% growth rate this year. He sees 25-30% earning per share (EPS) growth in FY12.
Below is the edited transcript of his interview with CNBC-TV18's Latha Venkatesh and Reema Tendulkar. Also watch the accompanying video. Q: How exactly things are working on the ground for you in terms of execution, in terms of working capital and in terms of order flow? A: The company does not have any hiccups. The company is very much on the track, as far as our deliveries are concerned, in terms of giving 25-30% growth rate this year. There may be concern that in monsoon generally the construction activity slows down, but monsoon is not prevalent all over the India. So, we have been a little careful in terms of choosing sites of construction. We would not let monsoon really effect. As far as order intake activity is concerned, that is very much on track. We have about Rs 3,000 crore at the end of the second quarter. We should be able to disclose the new order book. I think we should add about 40% or so on what we did last year. And that is about Rs 500-600 crore in the monolithic business. The prefabs we are getting more opportunities, especially in the tribal areas to construct some prefabs. Uttar Pradesh (UP) seems to be very promising in terms of both monolithic as well as prefab. We have been doing expansions and prefab projects. The custom molding business also seems to be robust. Q: It is not as if you have a very huge interest burden, about Rs 27 crore in the latest quarter. Are you noticing that you might expect the interest rate burden to go up? What is the total debt on your books? What is the expectation of outflow in FY12 and FY13 on interest? A: I don't remember the exact amount, but it went up by 20% YoY basis. And this is because last year we had a large capex of about Rs 700 crore. That was much lower than the capex that we had previous year. And part of this capex was taken through the P&L account. Therefore, the interest cost burden went up because we were in a position to utilise the money deployed as a part of the commercial activity. So that is one of the reasons. And also the interest rate went up. So, I do agree with you that if the interest rate keeps on going up, the interest burden will definitely increase. But we have to also look at it as an input cost and pass it on to the consumers in the end. Q: Are you able to pass on both your raw material as well as your other cost like interest in fuel? You did margins of 17%, when you last reported numbers. Can we assume that for the remaining three quarters? A: We will work towards improvement. Our target is somewhere 18.5-19% of earnings before interest, taxes, depreciation and amortization (EBITDA) margin. But quarter-on-quarter basis you may have some issues with regard to certain input costs. There is always a lead and lag in terms of being able to talk to the customers. But that varies from market segment to market segment. Its only in the custom molding segment where you directly deal with the OEMs and you have a cost sheet, you sit across, negotiate the price. So that may take little time. But in the other segments, for example, monolithic, you have a past through clause. Prefabs you generally work on quarter to quarter basis. So, you have a visibility exactly how the input costs are shipping up and you can always cover it up for the quarter. Water storage tank, you being the leader in the industry you always have first call to make in terms of price increase to be passed on to the market. Q: We understand that you have some amount of FCCBs redemption coming up. What the plan is on that? A: That is 225 million; 165 million is still lying as a deposit in the overseas banks. I do not say that we have any plans to do any acquisition outside the country at this movement. However, the time period is somewhere around 2013 of March. And that is far away. The trigger price I guess is somewhere around Rs 247. We will definitely look at the conversion of it. If we can't convert it, we will definitely pay back. The money is secured, the money is deployed somewhere that we can't pay it back. Q: You have an overseas acquisition, isnDiscover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
