Everest Kanto eyes 20-25% growth in FY13

Everest Kanto Cylinder posted net sales of Rs 143 crore in Q4FY12 against Rs 236 crore in the corresponding quarter last year. The company registered EBITDA loss at Rs 30 lakh in the quarter ended 31 March versus profit of Rs 104 crore in Q4FY11. Everest Kanto’s PAT stood at Rs 90 lakhs in the fourth quarter, compared to Rs 35 crore last year.

In an interview with CNBC-TV18, Prem Khurana, CMD, Everest Kanto Cylinder Limited attributed the drop in sales to 30% fall in the UAE business. At present, the company is coping with a high loan burden of Rs 450 crore and it is looking to repay USD 30 million this year.
Although, the markets in UAE, Pakistan and Iran adversely affected Everest Kanto, Khurana said that the order books from South America and US continue to be robust. Going ahead, the company is looking forward to a positive quarter and offers a growth guidance of 20-25% from the next few quarters. Below is the edited transcript of the interview on CNBC-TV18. Also watch the accompanying video. Q: Very rough quarter for Everest Kanto. Apart from the kind of slippage you have seen on sales, the worry is the big blow up that's happened on interest expenses and what it's done to your bottom-line. Can you just line out what you expect to see over the course of the next two quarters in terms of a recovery on your bottom-line and whether sales will begin to pick up again?
A: UAE has let us down because its sales are down almost 30%. We were mostly dependent on markets in Iran and Pakistan. Suddenly, these markets are just shut and now we are finding other markets. We have to lessen our dependence on these markets. We have already added new markets and in the coming quarters they will start showing the results.
We are sure, Iran or other countries will take the orders they have placed, sooner or later. The material is ready and is lying with us. This is one of the major reasons for the fall in sales.
As far as our India operations are concerned, we are satisfied. There is no move on infrastructure for CNG availability in various countries which was already promised many years back. Even today, CNG is not available in most of the cities where it should be used as a fuel.
We are sure that barring another quarter, the coming quarters will be really good. We have good orders from South America and other countries. Our USA operations have already picked up and they are showing signs of reasonably good profit in the coming years. We don't see such a quarter maybe, in the coming year. Q: A big erosion of your bottom-line has also come from the high interest costs. In fact in this quarter they have gone up almost 7-8 times. What is it that has led to this big spike up there?
A: The interest portion has not gone up much. Today, we have a loan of almost Rs 450 crore. Some of the loan is in rupee and that has gone towards a higher rate. Otherwise, our finance costs were always very, very reasonable. Possibly, we will reduce the debt day by day in the coming quarters. We are sure these costs are going to come down. Q: You have some convertibles, about USD 35 million worth of FCCBs, that are due to mature in 2012. Have you decided what exactly you want to do over there? Are you going to restructure? What is the plan for those convertibles?
A: No, there is no plan of restructuring at all. We are definitely going to pay. It is not much and the banks have already promised ECB of USD 30 million. We are not bothered about that. But the major concern is how we can increase the top and bottom-line from our working. Q: What is it that Everest Kanto Cylinder is confident of guiding to now? Even for the first quarter in terms of sales and what kind of order book visibility you can work with?
A: I won't talk about this quarter, because it is just trying to come up. From the next quarter, I am sure there will be growth of minimum 20-25%. Definitely the company will be in reasonably good profits this year.
In the next two years, we are planning major restructuring and a major thrust to our marketing. We are adding new markets and I am sure the coming quarters will be really good. Q: What kind of volumes have you delivered this quarter both on the CNG and the industrial front?
A: Total volume of cylinders this quarter was about 125,000 cylinders. This is from India and approximately 60,000-65,000 cylinders from the other places.