Capacity constraints to cap FY17 sales growth at 8-10%: Greenply

Greenply Industries’ revenue growth in FY17 is likely to be restricted to 8-10 percent due to its fairly high capacity utilisation level, said Joint MD Shobhan Mittal in an interview to CNBC-TV18 after the company declared its fourth quarter earnings on Tuesday.

The company posted around 6 percent year-on-year (YoY) increase in total income to Rs 453 crore in the fourth quarter of FY16 with operating margin improvement of nearly 230 basis points to 14.9 percent in the same period. However, net profit declined 9 percent YoY to Rs 41.3 crore.  

On the modest 6-percent YoY growth in full year revenues, he said, the demand situation was weak during FY16. However, Greenply had revised its guidance in mid-FY16 to 6-8 percent revenue growth and that has been delivered, he added.Below is the transcript of Shobhan Mittal's interview with CNBC-TV18's Anuj Singhal and Sonia Shenoy.Anuj: Net profit is down 9 percent despite income going up and EBITDA going up, is there any one off that you can explain?A: Last year we had Rs 16 crore exceptional item in our profit included. So, if you remove that the profits are up. There was Rs 16 crore exceptional item which was included in the net profit of last year, that is not to be considered. So, looking at the business operations the profit is up if you take the adjusted PAT.Sonia: Your stock was one of the best performers in the last one year. However recently in the last 5-6 months it has sort of gone into a range because the growth on your topline has been in low single digits. So, for the full year of FY16 as well it is just a 6 percent growth that you have seen. Do you expect to do better in FY17?A: Since we are already at fairly high capacity utilisation, we have always maintained that the growth should be at 8-10 percent. In the middle of last financial year we did revise our growth targets to 6-8 percent and that is sort of inline with what we had expected - the market conditions were not improving. So, we had revised our targets and that is where we are at.Sonia: For FY17 what is your target?A: I would say again between 8-10 percent.