In an interview to CNBC-TV18, Suresh Kalyan, CFO, Amara Raja Batteries spoke about the performance of the company in the second quarter. The company reported a net profit of 70.1 crore as compared to 52 crore (YoY) grabbing market share from Exide in Original Equipment Manufacturer (OEM) & Aftermarket.
In an interview to CNBC-TV18, Suresh Kalyan, CFO, Amara Raja Batteries spoke about the performance of the company in the second quarter. The company reported a net profit of Rs 70.1 crore as compared to Rs 52 crore (YoY) grabbing market share from Exide in Original Equipment Manufacturer (OEM) & Aftermarket.
Market has responded well as the stock is up 9 percent, though the capex has been slightly delayed. The net sales of the company rose to Rs 715 crore from Rs 560.3 crore (YoY). Its margins are at 16.4 percent in-line with management plans and is confident of maintaning them at the current levels.
Below is an edited transcript of Suresh Kalyan’s interview on CNBC-TV18.
Q: Your numbers are so much better than Exide which leads investors to believe that you have been grabbing market share from the market leader. How has market share dynamics moved over the last two quarters?
A: We are growing especially in automotive battery business. We are grabbing a market share both in OEM as well as in the aftermarket. We are equally focusing on growing our industrial battery business. Both together are helping us to improve our top-line as well as bottom-line.
Q: What about the UPS market, can you give us some details of how that has performed?
A: For us the UPS is a commercial UPS (Uninterrupted Power Supply), we are not a strong player in the home UPS business. We are addressing that through trading cells. But as far as commercial UPS segment is concerned we are having one third market share and have improved our price realization during the first half of this financial year.
Q: Your margins at 16.4 percent surprised investors. What led to the improvement in margins?
A: We are not surprised by the margin because this is as per our plan. We have strong growth coming in the automotive segments and automotive business is becoming a major part of our business. Hence, we are confident of maintaining this level of margin going forward too.
Q: You had earlier spoken about an EBITDA margin of 14-15 percent on an average in FY13. Would you like to scale that higher in the light of the performance this quarter?
A: Yes I believe that 15-16 percent despite the escalation in the cost is maintainable.
Q: Have you been helped by lead prices remaining under control?
A: Yes, but since the rupee is depreciating, again it is becoming volatile, we need to watch out. But we are still confident of maintaining 15-16 percent margins.
Q: Would you stick to that earlier expressed growth target of 12-14 percent in the auto replacement segment or do you think that's growing faster?
A: I think that is growing faster than what we expected. But then we need to really watch out for the competitive scenario in the market. But we would do all what is required to maintain this momentum.
Q: Are you on track with your capex plans that you outlined for Rs 230 crore this year?
A: Not really. Some part of the capex that we planned, would happen in the first quarter of next financial year. We would end up at about Rs 130-140 crore capex this year. But we would have a larger capex coming in the next financial year.
Q: Is there a need to raise capital over the next few months?
A: Not really, because we have a surplus cash of Rs 340 crore in the balance sheet. We are generating enough cash to take care of our accounts.
Q: Does the delayed capex mean the production ramp-ups that people were expecting would be delayed for next year?
A: No, the delayed capex does not necessarily mean that there will be a time overrun in the project. We are on course but we manage to defer our capex spend because of our vendor relationship.LIVE NOW... Video series on How to Double Your Monthly Income... where Rahul Shah, Ex-Swiss Investment Banker and one of India's leading experts on wealth building, reveals his secret strategies for the first time ever. Register here to watch it for FREE.