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Last Updated : Jun 08, 2016 01:32 PM IST | Source: CNBC-TV18

See 10% FY17 revenue growth despite export fall: Astral Micro

Astra Microwave is targetting revenue growth of 10 percent to Rs 450 crore, but this would mark strong growth in the high-margin domestic business even as exports are expected to come off from Rs 120 crore to Rs 45 crore, said Managing Director B Malla Reddy.

Astra Microwave is targetting revenue growth of 10 percent to Rs 450 crore, but this would mark strong growth in the high-margin domestic business even as exports are expected to come off from Rs 120 crore to Rs 45 crore, said Managing Director B Malla Reddy.

The entry of India in the 34-member Missile Technology Control Regime (MTCR), which could pave its way into the coveted Nuclear Suppliers Group (NSG) is a strong positive for India though immediate benefits for the company are unlikely, he added.

Below is the verbatim transcript of B Malla Reddy's interview with Sonia Shenoy & Nigel D'Souza on CNBC-TV18.

Nigel: Overnight we have got the news that the US has recognised India as a major defence partner and India is likely to join missile technology control regime. For your company what kind of an opportunity does this present and also could you give us timelines that you expect this entire process to take?

A: We are not expecting any major push from whatever has happened, but in general it will be good for the country. It's a long-term thing, no immediate effects in a year or next year. There could be benefits over a period of time but for us, immediately we are not visualising any benefits from this.

Sonia: Why is that? Don't you expect to get any kind of orders because a lot of companies will be getting orders I reckon and you guys manufacture a wide array of radiofrequency systems. Won't there be any potential order wins?

A: We are not an end product supplier as on today. We are a backend to somebody. So those who will be supplying as a part of this opportunity have to get orders and then they have to ask for our supplies. So it is a long way for us

Nigel: Long way would mean you are an indirect beneficiary, is what I am guessing and long way would be how long for them to get the orders then for them to pass on the orders to you and also could you tell us what is your order book at present, how much of it is export oriented?

A: Our order book is roughly Rs 570 crore. Our export order is less than Rs 40-45 crore.

I cannot guess about how long time it would take.

Sonia: Can you tell us about your own business. Your margins have been steady at 23 percent plus because of high mix of domestic business and that is doing well. Is this a level that you can perhaps sustain in the next fiscal?

A: Our business has leaned towards Indian business. If you see our history, a major portion of our revenue is coming from the local business.

Sonia: You were telling us about the margin performance.

A: Margins will be similar kind of margins that we were seeing last year. Going forward, there will be a slight improvement because the local business percentage is increasing so margins should improve.

Nigel: Last year you gave us the guidance and you hit the guidance for your revenues for your bottomline as well. For FY17 what kind of a guidance could you give us? Last year if I am not mistaken, you have done around Rs 420 crore or thereabouts, are you looking at 25-30 percent growth on the topline, what about your bottomline, what could it look like?

A: FY17 we have given a topline guidance of Rs 450 crore, bottomline guidance of Rs 65 crore.

Nigel: FY17, Rs 450 crore on the topline?

A: Yes and Rs 65 crore on the bottomline.

Nigel: That is less than 10 percent growth that you are estimating on topline?

A: Real business is growing from the local business point of view.

Nigel: And your exports business is not that margin accretive, your domestic business gives you better margins? So on the margin front, you will see some kind of improvement even though the topline is going up only by around 8-10 percent or thereabouts, your operating profit could come in much higher?

A: Yes.

Sonia: Can you tell us a little bit about your JVs? What kind of revenue flow would you expect from that maybe not in FY17 but over the next two years?

A: I think JVs will start generating their own revenues. Third year or fourth year onwards we expect the revenues to start in those JVs. First JV we have identified the leader and he is joining us in the middle of this month maybe in a week or ten days. The other JV, we have not yet identified the person, so it is a long way. Not immediately anything will happen.

Sonia: So we shouldn’t expect anything before FY20 from these two JVs, right?

A: Yes.

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First Published on Jun 8, 2016 01:10 pm
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