Growth in overseas startups boost results: Time Technoplast

Strong performance by overseas startups and reduced in employee costs strengthened Time Technoplast's fourth-quarter earnings, said managing director Anil Jain. The company also expects its domestic composite cylinder business to start contributing to overall revenues.

Below is the edited transcript of the interview on CNBC-TV18 Q: You have posted strong fourth-quarter earnings. Is the performance sustainable now that the base has gone up?
A: We are not looking at a quarter-on-quarter (QoQ) performance because last quarter we posted our highest performance thanks to our range of industrial products. We will continue to grow at 20 percent, the same of growth recorded as last year. Q: The other positive aspect regarding your earnings is that both on a quarterly and yearly basis, margins have improved nearly by a percentage point. Do you expect to sustain that improvement in margins which this time around was due to reduced employee costs?
A: The improvement in margins is not so much about the fall in employee costs. The main cause for the boost in margins is due to the contribution by the large number of startups that we launched overseas.
Our EBITDA margins will start to improve from now onwards. Right now, our overseas EBITDA margins are still below 14 percent while in India, we plan to boost margins by more than 17 percent. With overseas projects growing at about 40 percent, the aggregate EBITDA will continue to improve substantially. Q: Your consolidated earnings per share (EPS) this year is about Rs 4.9. Brokerages estimate it could be 5.6 in FY14 and 6.8 in FY15. Is that assumption right?
A: Yes, we expect significant improvement in profits. Our overseas projects have started to contribute to revenues after being a bit of a drag in the past. I think it is safe to assume that there will be significant improvement in EPS in coming years. Q: What makes you confident about your overseas projects? Is it that the investment phase is over or has the business environment in the particular overseas markets improved?
A: We made large investments in overseas projects only over the last two years. These projects have started to gain ground and in FY13 grew 40 percent. We also expect capacity utilisation in our overseas business, which is currently at 40 percent, to improve and continue to drive growth. Though our domestic composite cylinder business is yet to contribute, but we have managed to bag orders. Our infrastructure business is also doing well. Q: How is your pricing power? There are concerns that if prices of polyethylene prices rise substantially, it will hurt your margins. Can you shed some light in this? 
A: We have always been able to pass on the impact of the change in raw material prices and our customers are aware of this. Though we do that with a time difference of about a quarter, but eventually are able to pass it on.