McNally Bharat targets Rs 2500cr turnover in FY12

Deepak Khaitan - Chairman, McNally Bharat Engineering in an interview with CNBC-TV18 spoke about the financial performance of the company and its subsidiaries, McNally Sayaji, MBE (McNally Bharat Engineering) and CMT (Coal and Minerals Technology).

"McNally Bharat is targeting to achieve a turnover of about Rs 2,500 crore in FY12", he said. Though McNally Sayaji had muted performance in the last financial year because of the economic slowdown, it is expected to be back on its growth task of about 25-30% CAGR (Compound Annual Growth Rate) for next three years. Also Read: Buy Mcnally Bharat; tgt of Rs 336 said Way2Wealth Below is the verbatim transcript of his interview with Ekta Batra and Reema Tendulkar of CNBC-TV18. Also watch the accompanying video. Q: Can you just take us through the numbers for Q1 FY12 for the sales for the EBITDA margins as well as for the bottom line? A: I have got number for the whole year, March ending. These are the consolidated numbers and we have already given the quarter numbers of McNally Bharat individually about a month ago. But this is a consolidated number which includes McNally Sayaji - our subsidiary and our overseas operations - MBE (McNally Bharat Engineering) CMT (Coal and Minerals Technology) business in Germany. Q: So just take us through the topline and the performance of this subsidiary then? A: The top line has grown from Rs 1,800 crore to approximately Rs 2,240 crore. Profit from operations before interest is Rs 129 crore against Rs 122 crore. Here I would like to make a point that the German acquisition had just been bought so this is not the true reflection of the German operations although the turnover is there. The profitability was low because we have just taken over the company. We have muted results from our subsidiary also - McNally Sayaji last financial year. Q: Can you just take us through why there was muted performance from McNally Sayaji and what is your expectation going into FY12? A: McNally Sayaji had a little bit if a slowdown because of the economic slowdown. We are putting up a new plant in Gujarat so the movement of equipment and all that in the last quarter of the year led to a slowdown. Things have picked up very well. The order book of McNally Sayaji today stands at nearly Rs 300 crore. We are very confident that once this factory comes into being McNally Sayaji will be back on its growth task of about 25-30% CAGR (Compound Annual Growth Rate) for next three years. Our CMT business is now under full control. We are opening new avenues of businesses around the world - basically in Brazil which is a very large iron ore exporter. Wherever there is mining - the German company is opening its offices. We have very good operations in South Africa which is doing very well.  Q: How do you do on the margins front this time around and what is your expectation going into FY12? The last time we spoke - you said 6.5-7.5%. A: Our consolidated EBITDA is approximately at around about 7-8%. We hope to grow this to at least 11-12% this year (consolidated). Q: Now that you have done close to about Rs 2,250 crore on a consolidated basis with the year gone by - how would FY12 look like? What's the kind of growth? A: FY12 - this is the guidance going forward. We would be looking at approximately between Rs 3,200 to 3,400 crore. Q: You also indicated that the latest German acquisition that you did - it contributed to your sales but not so much in terms at a PBT (Profit Before Tax) level. How would your PBT level look like and what kind of contribution can that acquisition have for you all? A: We are looking this year at a topline of approximately of  about Rs 320 crore and PBT should be about 10-11% because the interest is not there. Q: What would CMT be contributing in FY12? A: This is CMT. McNally Sayaji