Eye 15% revenue, 20% PAT growth: Essel Propack

Below is the verbatim transcript of Ashok Goel's interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.

Sonia: I was going through what you have guided for in terms of revenue growth. You stand at 15 percent revenue growth in FY15 and 18 percent margins. Take us through what the second half of the year will look like in terms of growth on both these parameters?

A: 15 percent revenue growth, which is our global average and we expect 20 percent profit after tax (PAT) growth for the whole year. You referred to 18 percent – that’s the EBITDA margins. We will track 18 percent for the whole year and that’s how we see the EBITDA margins.

Sonia: Where will the revenue growth come in from? Will it mostly be exports or do you see domestic boost as well?

A: It is absolutely secular growth. We are growing in all geographies including India, China, Egypt, Europe, Mexico, Columbia - all the geographies are growing for us.

Latha: It looks like your compound annual growth rate (CAGR) over the last two-three years has been of that order. You were Rs 49 crore in 2013, Rs 55 crore in 2014. So I would assume that this year you are headed for a similar growth of 15-20 percent. Don’t you find capacity constraints; are you in for some capex programme?

A: We have added capacity over the last year and this year as well. We do cap our capex equivalent to our depreciation which is about Rs 140 crore and we will maintain that way. So that would bring in the revenue targets and the profit after tax (PAT) targets that we have explained - 15 percent revenue growth and 20 percent PAT.

Latha: What was the cost of the capex?

A: Rs 140 crore, which is equivalent to our depreciation.

Latha: So doesn’t add to your interest burden?

A: Yes, it doesn’t add to our interest burden.

Sonia: What about the European region. There was some slowdown that we saw over there. Are you noticing any revival?

A: Europe for us has been growing decently. Germany is growing, Poland has now turned into profit, it was loss making for us and as we build the scale of the capacity and the market, it will be huge growth geography for us.

Latha: Your last earning per share according to BSE is Rs 3.5 and cash EPS is about Rs 5.8-6. We should take it as 20 percent growth even at that level in the current year?

A: I would think so.