The company is targeting to maintain its EBITDA margins around 18 percent, says Gokul Jaykrishna, Joint MD of Asahi Songwon Colors.
Asahi Songwon Colors is expecting a topline growth of about 25 percent in the current fiscal year, said Gokul Jaykrishna, joint MD of the company.
Speaking to CNBC-TV18, he said the company is targeting to maintain its EBITDA margins around 18 percent. The company's capacity utilisation was significantly higher in the first quarter of 2016 (75 percent versus average of 65 percent), he added.
Jaykrishna said Asahi Songwon has spent Rs 8 crore on capital expansion of its pigment Alpha Blue and is planning another capex worth Rs 18 crore over the next two years.
Below is the transcript of Gokul Jaykrishna’s interview with Sonia Shenoy and Latha Venkatesh on CNBC-TV18.
Sonia: The company’s earnings have been very good in the quarter gone by, a revenue growth of 20 percent, profit growth of almost 50 percent. I want to understand where the trigger is coming in from. Is it because of exports, are your domestic segments looking very good? Can you take us through what the growth pattern could look like?
A: We have had a good quarter. Asahi had shut down in December where we did some de-bottlenecking of our main product, the CPC Blue Crude capacity and so the capacity utilisation in the first quarter of the calendar year was significantly higher than what we have achieved in the past at about 65 percent, now we are at about 75-80 percent. So, that is why the jump in the revenues and also, we believe we could do a lot of earnings before interest, taxes, depreciation and amortisation (EBITDA) unlocking. So, our EBITDA margins have moved from about 14.5-15 percent to 18 percent. And now, going forward it looks like it is scalable and we are also looking at two small expansions going forward which we should be able to improve our topline as well.
Sonia: We were asking you about your expansion plans. You said that you have two small expansions lined up. How much would you be looking to invest and how much will that take your production up to?
A: We have already done one expansion which is going to go on stream in a month’s time, that is Alpha Blue, that is a finished pigment which will use our own raw material and we spent about Rs 7.5-8 crore behind this and that project should be on in a month’s time and commercial production should be on in about two month’s time. And other expansion that we are planning is at a cost of about Rs 18 crore. This is to expand capacity of CPC Blue Crude by about 200 tonnes and this should take about a year’s time. And that should add about Rs 60 crore to our topline.
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First Published on Jun 15, 2016 09:07 am