Eye 10-12% topline growth in FY14: Steel Strips Wheels

Steel Strips Wheels aims to boost its financial performance going ahead. Mohan Joshi expects to see significant improvement in the company's topline, earnings before interest tax depreciation and ammortisation (EBITDA) and  bottomline.

The company is targeting a topline growth of 10-12 percent for FY14, he adds. Speaking to CNBC-TV18, Joshi says the company is now focusing on catering to the commercial vehicle (CV) segment. Below is the verbatim transcript of Mohan Joshi’s interview on CNBC-TV18 Q: Take us through your monthly sales, the month has been quite good for you both domestically and in exports? A: We have achieved third round of best sales triggers over past three months and are heading into a festive season and so, this was expected. The kind of portfolio that we are targeting right now is clearly conducive for the environment that we are living in. So, all the segments specifically tractors, exports, two-wheelers and three-wheelers are having fairly good growth coming in and we are expecting these numbers to continue. The traction will continue at a pace of minimum 30-40 percent growth for two-three wheelers specifically into high profile and high value margin businesses like tractors and light commercial vehicles (LCVs) and MSCVs, we are expecting slight recovery going forward and tractor market as we have already closed, we are targeting 15-20 percent kind of growth for the balanced six months. Q: With the rupee now stabilising around 61-62/USD mark, which is off from the levels of 67-68/USD that we saw few months back, do you think you can continue with this export sales run rate? It has gone up 86 percent on year-on-year (Y-o-Y) basis to come in at 1.4 lakh units, what is your expectation of the run rate on exports? A: The original equipment manufacturers (OEMs) that we served from India right now give us a clear advantage, it is of cost. The rupee would have been at 68/USD, would have been a far fantastic situation for us but having it at 61-62/USD also, the situation augurs well for us. Three – four new businesses that will start on the export front will continue delivery and we may see the 130-150 kind of run-rate continuing for next few months. The focus is on the commercial vehicle segment. Just few days back we have announced a commercial vehicle kind of an order for export markets so it is the beginning for us and I think the focus is generated there. There is a huge market to cater, pricing is the only condition, quality-wise there is no problem but pricing is the only issue which India at this point in time is catering well. I am very hopeful that going forward we may see these numbers moving beyond 1,50,000 on a monthly basis. Q: What would that mean for financial performance for this financial year? Do you see record performance in terms of topline and what would that mean for your bottomline as well? A: Right now, the topline will be a record number. The kind of number that we have achieved, we are targeting 10-12 percent kind of growth on that figure. We are not able to talk anything about the financials because in the next few days, we will declare our financial figures but going forward, the numbers look extremely good and the profitability will definitely increase because the debt is coming off. Going forward, in the next financial year you will see the debt servicing getting reduced because we are in to a peak year of debt payments. So, the financial performance from the perspective of topline, the EBITDA as well as the bottomline is going to improve significantly going forward. Q: Could you give us a few numbers on the debt reduction plans, where does it currently stands, how much will you reduce it by this year-end and even by FY15 end? A: At this point in time for the current year, we are almost paying Rs 55 crore of pre-payments in terms of interest as well as our principal. This is a peak year that we are going to hit and it is going to be reduced by a minimum of Rs 15 crore next year. That definitely will go down to the bottomline and the only conversion that we are trying to do here is that the topline grows at 10-12 percent and the mid-tier lines, which is the interest payments with the kind of repayment that we have for our existing facilities will fall and will give us the advantage on the net profit side. The incremental business that we are going to start from hereon till next six months will add up almost 10 percent to the topline and that is not going to be a detriment for the interest cost. It is going to give us the benefit on the bottomline because we are due for our results to be declared over next two days. So, I will not be able to share specifics for those numbers but going forward over next two-three quarters, the financial performance will definitely increase, EBITDA margins are expected to improve by at least 100 bps. Going forward, if the composition of the sales mix that we are catering to, the only grey area remains the CV segment. If there is any recovery in the CV segment that will definitely get reflected into the financials.