Aim to reduce debt to Rs 430 cr from Rs 700 cr: Time Techno

Polymer based product manufacturing company Time Technoplast aims to double its revenue in the next five years and company plans to do so by first reducing its debt to Rs 430 crore from present Rs 700 crore, says Anil Jain, MD of  Time Technoplast.

In an interview with CNBC-TV18, he said that the company's volume growth has been more than 13 percent in the first quarter of this fiscal and expects it to be in the excess of 10 percent for the year.Below is the transcript of Anil Jain’s interview to Latha Venkatesh and Nigel D’souza on CNBC-TV18. Nigel: The stock has been on fire. Looks like the markets are expecting very good outlook going ahead. Could you tell us a couple of details? I believe that you are expecting your revenues to double in the next few years. How are you going to get that done? A: In fact, we have planned that by the year 2020-2021 we would literally be doubling our turnover. At that point in time, we would be actually having EBITDA in excess of Rs 720 crore. And the debts which are currently at about Rs 700 crore odd will come down to about Rs 430. But the most important thing will be that return on capital employed (ROCE) at that point in time will be more than 22 percent. In fact we have said from this year itself, we will be improving our ROCE by 2 percent every year. And this plan has been made out clearly looking at our existing businesses which are seeing a decent growth. But we are also seeing a major growth coming in from composite cylinder business which is doing extremely well now. And we have expanded our capacity for PE Pipes where we see a huge demand coming up and on top of it, we are launching a new product in October this year that is MOX film which is in multi-layer oriented cross laminated film and with a capacity of 6,000 tonnes. Probably even before the starting of production, we have enough enquiries and demand for that one. So, all of these factors will actually add up to take us to the level we have projected. Latha: Doubling turnover in five years would mean a 15 percent compounded annual growth or even less. At the moment, you have done flat. If you look at FY15 and FY16, there is no growth at all. From where do you get the confidence to do a compounded annual growth of about 12-15 percent? A: Actually if you look at. This is what we are talking about the value growth. But if you look at the volume growth compared to the last year, we are in excess of 10 percent even then. And if you look at the first quarter, we have recorded a volume growth of 13 percent. Wherein about 12 percent is coming from the domestic market and 16 percent from overseas. Now all the dragging factors actually have gone because we have expanded in last 3-4 years. As Nigel mentioned that our performance was not as good because we went out in almost about 9 countries with our manufacturing units. In the beginning they were actually eating some cash, but from the last year onwards, they are firing on all cylinders and all of them are profitable. In fact, in nine countries that we had gone to, in eight countries already we have become the market leaders. So they will grow from here onwards. Composite cylinder which have been quiet for quite some time. In fact four years to be precise where we invested a lot of money is now getting a lot of traction. We are having a sizeable order book position, a lot of orders in the pipeline. So we expect that this capacity though as compared to Rs 35 crore last year, we should be doing about Rs 80 crore and we will do Rs 150 crore next year and then we will probably go for expansion of this capacity. So, all of these factors have been properly lined up and we certainly feel that we will actually be there. Nigel: There is so much of talk about composite cylinders, everyone is waiting for them, this sounds to be safer, lighter, it also lasts longer. I believe your capacity you have doubled to around 7 lakh cylinders, what is the current capacity utilisation. Till recently it was only 50-60 percent. Are you looking to add more capacity over there and give us a broad outlook? For a lakh cylinders how much does it come to, what is really the cost over there? A: You are right, actually we had the capacity fiscal 300,000 cylinders earlier. We added another 400,000 that became 700,000 cylinders. This year we should be doing upwards of 500,000, for which the orders are already in place and the next year we will actually go for the full capacity, that is 700,000 cylinders and will add the capacity towards the end of next year. That has already been planned in our expansion up till 2020-2021 that I mentioned. Composite cylinders as you rightly said they are light weight, explosion proof, they cannot rust or corrode and you can see the level of LPG inside. So, this is a new technology which came from aerospace. Nigel: At 7 lakh capacity if you are at optimum capacity then what exactly is the revenues we can expect from there and also if you are adding capacity what exactly is the cost that you will have to incur, suppose you are adding another 7 lakh cylinders if that is the case, then what exactly is the cost? A: You are right, with this capacity that we have in place we can do up to Rs 160-170 crore depending upon the size of the cylinders that we get the orders for. To add equal capacity we will have to invest something like Rs 65 crore which we have planned at the end of next year and that will then mean that we will be in excess of Rs 350 crore in terms of our turnover that can come from composite cylinders.