Group CFO of Strides Arcolab TS Rangan tells CNBC-TV18 that the company is betting on Agila to drive growth in FY13.
Group CFO of Strides Arcolab TS Rangan tells CNBC-TV18 that the company is betting on Agila to drive growth in FY13. “Agila contributes 60% to total sales, and we expect its EBITDA margin to be above 30%,” he said.
Though the company hasn’t given a guidance, Rangan says they will be able to drive growth momentum going forward.
In the last quarter, Strides reported net profit at Rs 642 crore as against Rs 40 crore the previous year. “It was a 100% plus quarter for us because of the profit on sale of Ascent which is around Rs 613,” said Rangan. Revenues grew by 8% while profit at the EBITDA level grew 36%.
The company also managed to trim its debt to Rs 1,200 crore as against Rs 2,300 crore a year ago, causing its net debt to equity ratio to fall to 0.63 from 1.6.
Below is an edited transcript of his interview with Mitali Mukherjee. Also watch the accompanying video.
Q: Could also tell us what happened on revenue line and in terms of margins in the first quarter?
A: First quarter has been a very strong quarter for us because the performance has been driven by operations. Looking at growth, we have grown like to like 8% over Q1 FY11. Having said that, if you take out the divested business of Ascent, then we have grown by 40%. On EBITDA level the company has grown at 36% and normalised one is 64%.
We have also this quarter considered the profit on sale of Ascent, which is around Rs 613 crore. Overall the PAT for the company for the quarter is Rs 642 crore, vis-à-vis Rs 40 crore last year, which represents 100% plus quarter.
Q: You resisted from giving a guidance last quarter. Are you feeling more confident about setting out a guidance for the current year now and what is it that you think you could do in terms of revenue and profits?
A: We did not provide guidance. Agila is predominantly driving the growth and we are confident of achieving operational EBITDA of 23-30%. So overall for 2012, the operation will drive the performance and we will be able to maintain the growth momentum.
Q: Agila contributes about 40% to your total sales, so what do you expect to do on a consolidated basis for the current year in terms of revenues?
A: Agila is actually 60%, and there the growth is driven by new product launches and that is why we have refrained from giving any quarterly guidance. For example, in Q1 2012 we commercialised more than eight products and we continue to maintain the momentum in product approvals. So we will not put a particular number for guidance for the overall group is concerned. Having said that, the profitability will be driven by Agila where the EBITDA margin is more than 30%.
Q: Could you update us on where our net debt levels stand at right now?
A: Net debt to equity is 0.63; it was 1.6, so that is significant reduction and strengthening of the balance sheet for the company. We have a cash balance of Rs 945 crore as of March 31, 2012, whereas the bond liability is close to about Rs 600 crore and which has been fully covered by the management. So we expect the debt level to be significantly reduced. It was Rs 2300 crore in December 2011 and it has gone down to Rs 1200 crore as of March 31.