Hatsun Agro Products is confident of maintaining its margins at around 9 percent levels going ahead. Speaking to CNBC-TV18 about the financial performance of the company, CMD RG Chandramogan said that its branded business is overtaking commodity business leading to margin improvement.
The company’s net profit in Q3FY14 doubled to Rs 31 crore versus Rs 15 crore, on a year-on-year basis. Total income in Q3FY14 rose 16.5 percent to Rs 633 crore versus Rs 543 crore. Its Q3 margins stood at 9 percent versus 7 percent (Y-o-Y).
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Below is the edited transcript of RG Chandramogan’s interview with Reema Tendulkar and Sumaira Abidi of CNBC-TV18.
Q: This was a good quarter for you, what could we expect that the company will close FY14 with and what are the early signs that you are getting how FY15 will shape up for revenue growth for the company?
A: In FY14-FY15 we are expecting growth of 25-30 percent on the topline and the bottomline probably depends on our product portfolio.
Q: Even your margins have improved. Last quarter you had it at 9 percent, this quarter too it has come in at 9 percent, so from the last year where you had it around that 7 percent region, you all have moved up. Is 9 percent now the new reality, is that where we can hope margins to sustain?
A: There are two things that have happened. Last year, our commodity business that is a branded business the ratio was comparatively higher. Today, commodity has become less and branded businesses have become more. Also, last year we were on the verge of building brands in ice cream, curd and today probably we are only servicing brands from where critical volumes have come. This is one of the reasons why margins have improved and it will continue.
Q: So you will maintain margins at 9 percent?
A: We can maintain it easily or probably we can improve on it.
Q: You also have quite a bit by way of expansion plans; could you tell us how much the company has outlined for its capex for the next fiscal year?
A: In the next fiscal year, expansion maybe in the region of about Rs 220 crore.
Q: We understand that there was some plant in Tamil Nadu also that were supposed to come on track next month, is that on track to commence operations?
A: Yes, not next month. It will be commissioned in the month of March.
Q: What will be the capacity there?
A: Capacity will be about 2 lakhs litre.
Q: This Rs 200 crore capex that you are looking at to invest next year, how will you be funding it?
A: There are accruals and we can take loans. The net worth of the company will be more than Rs 200 crore this year.
Q: What is the cash that you currently have on your books?
A: I have to check. The deposition itself will be about Rs 60-65 crore. PAT will be excess and cash flow for the next year will be equivalent to the project without any difficulty.
Q: Would some of this expansion also includes perhaps into international geographies?
A: Not much, it mostly domestic.
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