Aiming to up PAT by 50-60% this fiscal: Insecticides India

Insecticides India recorded a 66 percent rise in second quarter net profit at Rs 22.9 crore versus Rs 13.8 crore, year-on-year. While net sales were up by 18 percent at Rs 402 crore versus Rs 340 crore, Y-o-Y.

The company also recommended 1 bonus share issue for every 2 held.

In an interview with CNBC-TV18’s Reema Tendulkar and Ekta Batra, MD and CEO Rajesh Aggarwal discussed the company’s performance and the outlook ahead.Below is the transcript of the interview on CNBC-TV18.Reema: Can you walk us through what the revenues as well as what the EBITDA margins were in this quarter?A: We did sales of approximately Rs 436 crore and EBITDA increased to Rs 42.74 crore. It was a good increase in EBITDA margins as well as profit after tax (PAT). We had targeted about 100 bps (1 percent) increase in the PAT margin but we have surpassed that in a good way in the half year.Ekta: What led to the 18 percent top-line growth? A: The new plant at Dahej has stabilised and is making good production. We produced 25 percent more in the half year this year than we did in the whole of last year from that plant. New products have started as well, which helped us in increasing the institutional business as well as the brand business.So this helped a lot, otherwise this was a very difficult year actually with bad monsoons and you know what happened to agriculture this season. Reema: You spoke about the strong quarter on the back of a pickup and increase in capacity at the Dahej plant. Can you tell us what the utilisation was at Dahej and how will it improve over the next two quarters?A: Utilisation last year was sub 40 percent as we went for a plant upgrade from December to March during which time it was shut. This year, we believe, we should be able to do average 75 percent utilization. October and November are shutdown periods and we hope it increase to 85 percent plus levels to reach our target.In the next fiscal, our target is to take it to 100 percent.Ekta: In the first half you have done around Rs 40.3 crore for the entire first half in terms of profits and that in fact has surpassed your full year profits of the previous year, which stood at around Rs 39 crore.A: Yes, that is true.Ekta: So what would your guidance be for the second half then, how much do you think you can end FY15 by?A: Generally, the first half is the best better for the agro-chemicals sector with the second quarter being the largest quarter. We have achieved more than 60-65 percent of the top line in the first half itself of our target of Rs 1,200 crore this year. If everything goes as planned, we should be able to achieve the target. Since we are targeting a 1 percent increase in PAT margins, our bottom line should increase by 50-60 percent for the full year.Reema: What can you expect at the operating level. What is the EBITDA margin you are targeting for the full year?A: We have already touched Rs 70 odd crore in EBITDA by now, and if we grow by 60 percent from hereon, it would be roughly Rs 100 crore plus this year.Ekta: If you could tell us the reason behind the bonus issue?A: The company has started performing well. Last three years were one of struggle because we had undertaken major expansions and were spending on it. Last year, the company expanded in almost all six locations and our R&D centre has come up.I believe that now we will start showing continuous good growth and we did the bonus issue as a token gesture towards our investors. I believe we will be able to serve the additional amount of shares and we will be able to maintain the earnings per share (EPS).From next year, we will be able to grow EPS further because I believe in the next two-three years, we should be able to grow profits in a big way for the company.