The company is currently enjoying 15-20 percent margins in the domestic market.
Nitin Fire Protection received approval from Underwriter's Laboratory in the US for emergency lights for fire safety protection. The market size for this product in the US is USD 250 million. Speaking to CNBC-TV18 Rahul Shah, executive director of the firm, said the company has been growing at 20-25 percent compound annual growth rate (CAGR) since last three-four years and is hopeful of continuing that momentum for a couple of more years.
The company is currently enjoying 15-20 percent margins in the domestic market. It is looking to penetrate the US market with this new approval.
Below is verbatim transcript of the interview:
Q: What is this product all about and what kind of market size is there? How much do you think it would add to your revenues over the next one or two years?
A: This is a one-off breakthrough that we got in our range of products that includes emergency lighting which is currently being used in most developed countries. The essential use of these is, in case of any disaster or fire they have to disconnect the main power supply.
Therefore, this emergency light acts as a kind of rescue operation at places like staircases, emergency exits and rest of the places where there is no possibility of any source of light. UL is a very stringent approval which we have got which allows us to get into a lot of markets. India is also one of the huge markets for such opportunities that will open up for us.
Q: Your last quarter numbers looked very good in terms of revenue growth year-on-year (YoY). Is your quarterly number likely to be Rs 400 crore for the year that was and are we likely to a significant step up in FY16?
A: Since we are into major EPC business there are cyclical swings in our quarter revenue. However, if you look at the last report that came up by the Standing fire Advisory Council and National Disaster Management in April 2012 stating that there is 97 and 80 percent deficiency in terms of fire protection in fire stations, rescue vehicles and equipments in India.
Currently, we are only a smaller magnitude of the total market which is opened up. So, we will have to go a long way to cover up this deficiency which is a huge opportunity and will be opening up for us soon. We were looking at this large opportunity to be capitalised into this Indian market.
Q: Are you going to see a 25 percent CAGR over the next three years or even next two years? Give us some idea of the quantum of growth?
A: In last three-four years we have been growing at 20-25 percent CAGR and we hope to continue that momentum for next couple of years because the opportunity is at large and we have seen various government actions in favour of the industry to provide and the infrastructure to protect people from the disaster of fire. So, we see a lot of these opportunities to come up and the revenue also would speak for it in next couple of years to go on.
Q: Last quarter your margins were down quite a bit. Is your focus now on improving revenues at the cost of margins and is that a tactical strategy that you employ?
A: The strategy of the management now is to grow up the margins and the EBITDA levels by 100-200 basis points. Revenue growth will surely be there but not at the cost of margins any more because opportunities are large so we want to more focus on growing the profitability of the company and the EBITDA margins going forward.
Q: Any strategic tie-ups, technological tie-ups more importantly strategic – will your capital be disturbed by anyway, will you issue more capital?
A: We already have a resolution in place currently. We are looking for some strategic tie-ups but maybe would not be at the cost of capital. Maybe just like a joint venture kind of thing where we would be substituting some of the products which we are currently importing to be used against technology which may bring to India or Indian substitutes.The Great Diwali Discount!
Unlock 75% more savings this festive season. Get Moneycontrol Pro for a year for Rs 289 only.
Coupon code: DIWALI. Offer valid till 10th November, 2019 .