In an interview to CNBC-TV18‘s Latha Venkatesh and Sonia Shenoy, Rahul Jain, ED, Pokarna, said the sentiment in the granite industry has been positive
Pokarna, India’s largest exporter of finished granite, has seen a big rally -- almost doubling since the beginning of the month.
In an interview to CNBC-TV18’s Latha Venkatesh and Sonia Shenoy, Rahul Jain, ED, Pokarna, said the sentiment in the granite industry has been positive and the export market has seen good traction in the last few months. Exports constitute 70 percent of the company’s total sales.
Below is the transcript of Rahul Jain’s interview to CNBC-TV18’s Latha Venkatesh and Sonia Shenoy
Latha: What do you do, stock rising 564 percent in the past year, what is going so good with your granite business if you can detail how your exports are doing, how your domestic business is doing as well a bit of business outlook?
A: Honestly I cannot comment on the share price movement because it is against our company policy. But overall the business sentiment has been very strong in the export market especially the American market and the European market where majority of our business happens. The customer confidence has become better and the business overall looks stronger this year compared to what it was last year.
Latha: How much do you export and how much is domestic?
A: Domestic for our granite business is close to about 70 percent is export and 30 percent is domestic. For our quartz business 90 percent is export and 10 percent is domestic. To give you a brief about our granite company we are one of the largest granite exporters out of India and we are a completely integrated company where we have 15 mines of our own. So most of the products that we sell today is coming from our own mines which is close to 70 percent. So that is the reason why customers have more confidence in us because we are able to deliver good quality products at the right price and at the right time.
Since we are in this business for the past 20 years, we have a strong business relationship with most of our customers and it is the same customers today, most of them are buying quartz from us so the business has increased with each customer year on year. The quartz business has been growing significantly for example I have some data from Fredonia where the market share of quartz in 1999 was 2 percent and now in 2012 it has become 7 percent overall. And the quartz CAGR growth is about 16.5 percent which is a huge growth which is happening right now.
Sonia: Do you supply to the residential market mostly or is it demand for non residential granite also that has gone up?
A: It is both, both residential and commercial projects. We are doing quite a few projects both domestic and internationally. For confidentially clause I will not be able to reveal the names with whom we are working with but there are quite a few.
Sonia: Can you just give us some numbers in terms of what your revenue growth could look like? In the first half of the year you did about Rs 93 crore of revenues which was a growth of 14 percent. How much are we staring at in the second half of the year?
A: We cannot give you any future projections.
Sonia: Will it continue to be a 15 percent growth or do you think a 10-15 percent is a realistic level?
A: In the first half of this year, though our standalone revenue has grown by 14 percent, whereas our consolidated revenues have grown by 31.43 percent because the quartz business is part of our subsidiary and the business overall looks very strong.
Latha: Is it a 100 percent subsidiary the quartz business?
A: Yes it is.
Latha: What is the share of revenue that comes from quartz? Quartz is what goes into watches right?
A: No quartz also goes in watches but here we are making stone out of quartz. It is a technical knowhow which we have taken from Breton, Italy and we are exclusive partners for them in India. We are the only ones in India to make quartz with the Breton line. There are very few companies in the world market who have this Breton technology tie-ups, some of them are LG, Samsung, and in India we have partnered with them. This is a specialised product where you make stone out of quartz and it is 93 percent quartz and 7 percent is resin.
Latha: So what share of your total revenue comes from quartz?
A: Our revenues from our engineered stone in the first half has grown by 82.47 percent. Aggregate revenue number for the first six months would be close to Rs 50 crore from quartz.
Sonia: What is the reason for which your margins have gone up so much and do you expect the margins to continue to rise in the second half of the year?
A: I cannot say whether the margins will rise or not as we are not allowed to make any future projections.
Sonia: But what is the reason for which your margins have risen so much so far?
A: Our margins have risen also because customers have been buying more from us in the first half that we have seen and also the dollar has helped us to a certain extent. Tighter cost controls have also added to this because lot of the material today is being consumed from our captive mines so that makes a big difference.
Also, though I told you that 93 percent of the raw material is quartz but the best quartz available in the world market is from Andhra and Telangana. Andhra and Telangana have huge reserves of good quality quartz and this is the reason we set up this plant.
Latha: Your year-on-year profit growth has actually tripled, so would your earnings grow pro-rata? Give us an idea of what the growth trajectory is.
A: The business overall looks very strong and the business sentiment itself is very strong. All the customers that we work with are very optimistic and today we have a global reach, we are working in 69 countries almost so when you work with so many countries growth will obviously come when you have expanded the distribution base to such a large extent.
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