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Last Updated : Aug 19, 2015 05:26 PM IST | Source: CNBC-TV18

Eye 22-25% growth in FY16; focus on Europe, US: Nitin Fire

In an interview with CNBC-TV18, Rahul Shah, Executive Director at Nitin Fire says the company is planning to further expand business in European, African and the North American markets in coming years.

After a steady June quarter, Nitin Fire is aiming for a 22-25 percent revenue growth in FY16, the company’s Executive Director (ED) Rahul Shah told CNBC-TV18.

The company’s total income grew 18.6 percent to Rs 339 crore and profit after tax (PAT) rose 11 percent to Rs 20.8 crore. Margins expanded 140 basis points in the June quarter.

Shah says Gulf Cooperation Council (GCC) and UAE business have been growing at a steady pace. The company is focusing on Europe, Africa and North American markets in coming two to three years, he added.

Shah expects margins to improve by 50-100 basis points (bps) this year. On the company’s expansion plans, Shah says that with adequate capacity for another two years, there are no plans to raise funds. Internal funds will be ploughed into the business for growth

The company is aiming to become a USD billion by 2020 for which the road map is set already, he says.

Below is the transcript of Rahul Shah’s interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.

Sonia: I am sure you haven’t as much interest in your company and your stock as you have seen in the last one week or so but just tell us a little bit about what the next couple of quarters could bring about because leaving all the star power aside, the operational performance of the company has improved so income growth of 20 percent, EBITDA growth of 35 percent, will this good run continue?

A: Since the fire protection industry is an ancillary to infrastructure, we look forward for growth in few more quarters to continue and the momentum should continue as long as we still have growth happening across the world. We being a fire protection company with lot of international approvals worldwide are getting much larger requirement for protection across the globe.

Latha: Why did Amitabh Bachchan invest in your shares, what must have convinced him?

A: We haven’t met him or we haven’t spoken to him anytime, so it is purely his call.

Latha: Let me come to the approvals that you have got. We understand that you received approvals from Underwriters Laboratories (UL) in the US that is as recently as a few months ago. What does this open up in terms of sales?

A: The company in last couple of years has been venturing into getting a lot of international approvals because all the fire protection systems and projects what we do are utilising internationally approved products.

We have invested huge amount into research and development (R&D) and this is amounted into these approvals which allows us an access into major markets of the world like currently the Gulf Cooperation Council (GCC) and the United Arab Emirates (UAE) business is doing exceptionally good thanks to all these approvals which we have got into place. We are looking at exploring other newer markets as well with the approvals which are there.

Latha: What are you looking at in terms of revenues, this year and possibly even next year if you have visibility?

A: We are looking at growth which was last couple of years 20-25 percent growth in terms of topline growth and substituted with a better growth in the bottomline as well. So, for next couple of years this growth momentum should continue.

Latha: You mean bottomline will do better than 20-25 percent?

A: Yes we are looking at improving the margins.

Sonia: You did mention that your target is to become a billion dollar company by 2020. Are you on track to achieve that target?

A: Yes, the roadmap is already there into place. The roadmap towards that was appointment of Deloitte as a joint auditor was the move as well into that direction.

Sonia: A majority of your revenues comes from the overseas market and you mentioned that you are looking to get into new markets as well. What are the new markets that you are looking at and what could the scope be say in the next three to four years?

A: We are currently looking at GCC, Middle East which has a lot of growth potential coming up and parts of Africa and Europe. These markets are growing currently. However, North America would still be an opening in next two to three years down the line for us.

Latha: You said that you are looking at an improvement in margins as well. How much can you improve?

A: Every year 100-150 basis points should be a good number to look at in terms of improvement of margins.

Latha: Where will this improvement come from? Your fixed costs are done and therefore, you have an operating leverage?

A: We are planning to work at the same capacities and over produce. So, we should be able to reduce our operating cost with the growth in the sales as well.

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First Published on Aug 19, 2015 10:00 am
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