Expect profit of Rs 150 crore for FY17: Time Technoplast

Nigel: On the topline we have seen a growth of around 4 percent, as you have mentioned it is not like-to-like comparison because of discontinuance of some businesses. What is the like-to-like comparison if we exclude those businesses even from the same quarter last year and also could you tell us realisations are under some pressure I believe because we have seen a big jump in volumes but I think of value has not grown as much. What is your outlook on realisations?

A: The net sale has gone up by 10 percent. The volume growth is about 13 percent; I am talking about apple-to-apple. EBITDA has grown by 12 percent and the profit after tax (PAT) has grown 15 percent this quarter. The volume growth is higher, not because margins are under pressure because if you look at our EBITDA margins, they have moved from 14.32 percent to 14.83 percent.

The difference between the volume and the value growth is because the raw material prices have gone down and since we are B2B business, we pass on the reduction to our customers. Therefore you would find that the value has gone down but the EBITDA margins have grown about 0.5 percent as compared to the last quarter.

Surabhi: What is the outlook from hereon on your different businesses? If you could give some sense of the sort of revenue growth we can expect?

A: We are poised for a 15 percent growth in the current year and this will be both, our Indian and overseas businesses. In fact our overseas businesses are recording better growth than India, so, the consolidated growth will be about 15 percent. I think the highlight would be that we will move our return on capital (RoC) by 2 percent by the end of the year. The debt will be coming down and we will see expansion in our margins.

This 50 percent growth will come from our composite cylinder business which we have been talking about. Now we have got a full order book, we have booked a capacity of 70 percent or else in the next year we will have to expand because we have got thick pipeline of orders. In Q3 we are launching a new product which is for greenhouses. In pipe business, we have seen massive growth, so, all these factors will come in, improve our turnover and we will be looking at a profit of about Rs 150 crore PAT.

Nigel: Just a couple of details I wanted. You said you are looking at a profit of Rs 150 crore for the year; did I get that right, from Rs 138 crore it is going to go to Rs 150 crore and the RoC last year was at around 14 percent, it is going to improve to 16 percent?

A: Our RoC was about 13 percent; we are looking at 15 percent.

Nigel: The other point you made about the composite cylinder, I have been looking at the company very closely, you mentioned that you have got more orders that have come for this composite cylinders, I think the total capacity is at 7 lakh cylinders so you have got orders for the entire 7 lakh. What kind of capacity utilisations are you functioning at, have you got some fresh orders that have come in?

A: We have got the order booking for 70 percent of our capacity. So, that is already in the pocket and we are expecting lot more. There are orders which we have received which are running into few millions. Therefore, we will probably have to increase our capacity next year sometime.

Nigel: Again you are going to be going in for capex and all?

A: That will be next year sometime but there will be a marginal capex, not a great deal because we already have infrastructure and all the equipments. So, we will probably have to invest a little bit to double our capacity next year sometime.

Nigel: Could you tell us what is your debt currently. It has come down substantially in the last year or so and now you are talking about doing more capacity maybe in FY18 or so. What kind of numbers are you looking at if you have to raise some kind of capacity then will you look to raise more debt, what levels are you comfortable with because the street has already been saying that every time they are factoring in some good news, then you go ahead and do some more capex so what is your take on that?

A: Not quite actually, we have already said that we will not be increasing our debt, so, the debts actually have been frozen. By the end of this year we will be reducing the debt by about Rs 40 crore and yet we will actually be doing all these projects that I have talked about. So, it is basically our internal accruals which will be used for this one and also that internal accruals will be used to reduce the debt, which all combined together will improve our RoC by 2 percent as I mentioned.