Burdened by high fin cost; banking on rupee fall: Hanung

Hanung Toys & Textiles crashed more than 19 percent (52-week low) to Rs 83 per share late on Thursday after the company reported net loss of Rs 33.06 crore in the March quarter. The company had reported its Q4 numbers on Wednesday.

Speaking to CNBC-TV 18, AK Bansal, CMD. Hanung Toys said the company faced high depreciation and financial cost due to capex undertaken during FY12 and FY13. In FY 13, financial costs went up by 30 percent to Rs 166 cr versus Rs 128 crore in the year-earlier period.

Bansal is however expecting to gain from rupee depriciation as most of its business comes from exports.

Below is the edited transcript of his interview with CNBC-TV18

Q: Why did depreciation and finance cost spike up so much?

A: During last two years, we did capex more than Rs 300 crore. Before financial year 2012, all the interest costs were charged to the capex. During last year, all the interest as well as our incremental depreciation has been charged to the profit and loss account.

If we compare the 2012-2013 figures with 2011-2012, at that time the Profit Before Depreciation and Tax (PBDT) was Rs 150 crore for financial year 2012. Now it is Rs 145 crore, so there is just Rs 5 crore of difference which is around 3 percent down.

If you compare that Profit Before Tax (PBT), last year it was Rs 121 crore and now it is Rs 80 crore, and there is an incremental depreciation of Rs 37 crore. If you add it, it comes to Rs 117 crore as compared to Rs 121 crore.

Q: When will the depreciation impact taper off? How much is the depreciation likely to be in FY14 or even if you want in Q1?

A: Definitely it will taper down. Moreover, whatever the capex we have, we will start getting benefits from  that. We will start getting growth in sales.

Q: Could you tell us why have you come out with number so late? The stipulated requirement is to come out with numbers by the end of last month.

A: It was the first year the Securities and Exchange Board of India (Sebi) has announced that results need to be come by this May. We have eight production centres as well as two overseas offices. In the overseas offices also, the year-ending is December.

We need to modify the accounts to include the March quarter as well as to delete the previous year's March quarter.

Here too we need to gather all the information and we have got very limited time this year. We need to gear ourselves up to complete it before May 31.

Q: You had all these centres even last time. I do not remember you reporting results so much after the deadline.

A: No this is first time. We never delayed.

Q: What was different? Last time also you had all these international centres.

A: Last time the time was higher.

Q: Did you get some special permission from Sebi?

A: Yes. We have requested Bombay Stock Exchange (BSE), National Stock Exchange (NSE) and Sebi for the extension of time, and now we have informed them that we have declared the results.

Q: For FY14, what kind of numbers can the market expect in terms of top-line and bottom-line?

A: We are expecting growth of close to 25 percent on the top-line, and our bottom-line will improve more than 25 percent. Right now there are two positive factors, one is the US market.

We are getting plenty of fresh orders. Second is the dollar/rupee movement , which is in favour of exporters.

There too we are going to get the advantage. We hope to increase our Profit After Tax (PAT) by at least 3-4 percent minimum.

Q: You think your margins will improve this year?

A: Yes.