From the sidelines of the Religare Conference, Insecticides India’s promoter Rajesh Agarwal spoke to CNBC-TV18 about the company’s financial performance in the quarter gone by and the road ahead hereon.
Agarwal is confident of the company achieving Q3 targets. Furthermore, he sees its topline standing at Rs 1,100-1,200 crore this year.
Going ahead, he plans to make one R&D centre to establish a good laboratory practice (GLP) laboratory with approximately Rs 20 crore of maintenance capex for two-three years.
Below is the verbatim transcript of the interview:
Q: How the second half is panning out for the company as compared to the first half? Can you give us a sense in terms of what dispatches are looking like?
A: Second half generally is a little lower half than the first half. Over 60 percent of the business takes place in the first half but with the second half the rabi season beginning and at the moment it is a slow start but we must be able to achieve our targets in this quarter and in the next quarter I am also planning some growth, I see some growth. So we have given some indication of Rs 1,100–1,200 crore of topline in this year. I believe we should be able to do that.
Q: What about the bottomline, what could be the extent of a profit growth in FY15 considering the company has managed to improve margins?
A: I believe that the margin improvement has just begun this year and we had a target of about 300 basis points increase in two-three years of time but the first half of this year itself has shown the improvement of almost 200 basis points. I believe that we should be able to maintain this type of increase in this year and in the next year we should show further improvement.
Q: What is the utilisation level at your Dahej facility at present?
A: This year we will be doing the utilisation of roughly about 75 percent. The plant is in under maintenance at the moment and it is going to restart in December. I believe once it restarts and in January we should be doing about 85 percent utilisation and next year the target is 100 percent utilisation.
Q: Is this maintenance something that happened even last year and the reason I ask is that will we see some amount of impact on your Q3 numbers because of this?
A: It is our regular exercise but I don’t think that the impact should come on the Q3 numbers because we have certain stocks and the plant will restart and should support in our activities. We should be able to achieve our targets of Q3 is my belief.
Q: Any price hikes that the company will take or has undertaken?
A: At this moment it is not season time. It is generally the low season. So at this moment it is very difficult to spell out but the price hike depends on many factors, the international scenario, the currency pricing and crude pricing. At the moment everything has cooled off. Therefore, it is very difficult to say something at the moment but with the new year we plan something. Generally this is planned in the months of February and March, not before that. So it is too early to say anything on the price.
Q: Can you give us a sense in terms of what sort of capital expenditure (Capex) you have lined up because we do understand that you were planning a research and development (R&D) centre as well?
A: Yes, we are planning to make one R&D centre to establish a good laboratory practice (GLP) laboratory but at the moment we are maintaining our plans. We have planned about Rs 20 crore of maintenance capex for two-three years. So we are going by that, we are not planning very big capex immediately but I believe that once I am able to exploit my Dahej plant by 100 percent plus levels then we will go for further capex.
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