Moneycontrol
Last Updated : Mar 29, 2016 03:10 PM IST | Source: Moneycontrol.com

Rushil Decor to expand MDF, laminates capacity

In an interview with CNBC-TV18, Krupesh Thakkar, MD of Rushil Decor, discussed the company's business plans going forward.


In an interview with CNBC-TV18, Krupesh Thakkar, MD of Rushil Decor, discussed the company's business plans going forward.


Brokerage firm Antique put out a note on the stock yesterday, saying the company plans to double its medium density fibreboard (MDF) capacity by FY2019.


The stock has risen about 200 percent in the last one year.


Below is the transcript of Krupesh Thakkar’s interview with CNBC-TV18's Mangalam Maloo and Ekta Batra.


Mangalam: I remember you spoke to us about a month and half ago and categorically mentioned that you do not have any capital expenditure (capex) plans and your next leg of growth should come by increasing your capacity utilisation from 85 percent to 100 percent in your MDF plant. What caused the change and at the same time what is your capacity utilisation currently?


A: This was decided by the board later, so we could not declare it earlier. We have now decided to start two new projects of thin MDF of 300 cubic metre per day -- 90,000 cubic metre per year -- and a plywood unit in Laos, having 100 cubic metre per day and 30,000 cbm per year. There is also plan to expand laminate capacity by 100,000 sheets per month and 1.5 million sheets per year.


Ekta: Can you tell us then what your total financial outlay for your capital expenditure (Capex) would be and how exactly would you be funding it?


A: We are going to invest approximately Rs 100 crore into this project and it will be funded by financial institutitions -- banks -- and through internal accruals.


Ekta: So, it will primarily be funded via internal accruals and debt?


A: Yes.


Ekta: The ratio being?


A: The debt to equity ratio right now is 1.5:1.


Mangalam: And after this, what will be your debt equity ratio be considering you are sitting on a debt of close to about Rs 110 crore already on your books? What is the debt that you are planning to raise for this Capex plan going forward?


A: Right now, the ratio is 1.5:1 and fresh funds will be taken from financial institutions and banks.


Mangalam: How much?


A: It depends on what internal accruals will be and what we get from the banks.


Ekta: Why are you putting in this capex? What kind of demand are you servicing or what kind of demand are you envisaging in the next 1-2 years?


A: MDF is mostly imported from surrounding countries. We want to take that share by producing from India and we want to serve the India market. And that is why we want to increase the production capacity of MDF.


Mangalam: If you can then give us a timeline of when this plant is expected to come on stream? At the same time, what is the kind of initial strain that it will have on your books, considering that you have a goodish bit of finance cost sitting on your books as well. Will your company turn into loss at least for the first few teething years of this MDF plant?

A: It will take three years to start the MDF plant and two to start the laminate plant. During the nine months ended FY15, we posted a profit before tax of Rs 15 crore.

First Published on Mar 29, 2016 02:53 pm
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