Aim to reduce debt by Rs 180 cr; improve margins: HEG

In an interview fo CNBC-TV18 Raju Rastogi, CFO, HEG said the company hopes to improve on EBITDA margins to 18.5 percent from 17.5 percent in the next six  months with the help of operational efficiencies by reducing scrap and wastage of materials . Even in Q2FY14 margins were marginally better than that of last year, he added.

The company also aims to reduce Rs 180 crore of debt from Rs 500 crore on back of capacity expansion undertaken by the company in 2010. HEG is the leading manufacturer and exporter of Graphite Electrodes in India. HEG is the world's largest single site plant of Graphite Electrodes with a production capacity of 80,000 MT per annum. Below is the verbatim transcript of his interview on CNBC-TV18 Q: The comment which has been made about the company is that from FY09 to FY13 your revenues have gone up close to about 60 percent, but your profits have actually been flat over the last four or five financial years on account of lower margins as well as high interest costs. So on interest costs as well as margins what is the company's plan to improve? A: On the margin front the industry margins generally have come down since the period you are talking about 2009. The margins have been lower over last four years which is a fact but; we are bringing about operational efficiencies into our products, whereby we are reducing scrap and wastage of materials and thereby improving our margins. Improvement in margins is are visible in Q2FY14 results, wherein our margins are marginally better than last year and before last year. Q: What is happening with your deleveraging plans? That really was a big factor in your last quarter number results in terms of your below EBITDA performance. A: It is not deleveraging. We expanded in 2010 and for those expanded capacities we had to borrow money, and those repayments are already happening. We have done about Rs 100 crore worth of repayment during the first half and we are reaching about Rs 400 crore of term lending loans at the year-end. So that will help us and our total debt-to-EBITDA will be far better. Q: So by Rs 500 crore your debt should come down in this fiscal year? A: Rs 180 crore will come down this year. Q: You said that the company is also trying to take operational efficiencies. Where do you see your margins? A: We are presently in the range of 17.5 percent EBITDA margins and we hope to reach some 18.5 percent in next six months.