Hope to post 25% growth for the year: Hanung

Ashok Kumar Bansal, CMD, Hanung Toys and Textiles Ltd explains to CNBC-TV18 that profit fell despite rise in sales due to additional depreciation and cost of finance. Bansal adds that textile exports have grown 30% over last quarter and  expects to continue to post 25% growth over the rest of the year.

Below is an edited transcript of the interview on CNBC-TV18.  Q: Sales went up by 33%, but profit is down. What went wrong in between?
A: There are two factors. One is additional depreciation due to capitalisation of some machinery in March and second is the cost of finance, though we have reduced it from Rs 45 crore in the last quarter to Rs 40 crore in the present quarter. Going forward, we will try to further rationalise the finance-cost. Q: How will the cost of finance and depreciation behave out over the remaining three quarters?
A: Depreciation is going to increase because that’s going to add to the cash profit. But we expect reduction in interest thanks to a recent government announcement on some more interest subvention. This will help us to reduce cost and part of our rupee credit will be converted into Pre-shipment Credit in Foreign Currency (PCFC) to reduce the finance costs. Q: What’s led to the improvement in your margins? Has the pricing become better? Has the rupee helped in exports?
A: Yes. But I think there is a very small portion of the increase in the mortgage profitability because of mortgaging foreign exchanges. Q: How are your textile exports? What percentage do textile exports contribute and how are they likely to perform?
A: An overall 55% of revenue comes from textiles and 35% from toys. Our textile-exports business is doing very well. The net textile exports have increased from Rs 130 crore in last quarter to Rs 167 crore in the present quarter. I think there has been a growth of 25-30%. Q: Do you think you will be able to continue to the growth of 25-30% for the rest of the year?
A: We expect to post 20-25% growth for the year.