Saurabh Mittal says there was a 99 percent capacity utilisation in the laminates business in Q4 of FY16. So, they plan to increase capacity by 20 percent this fiscal.
Saurabh Mittal, Managing Director and Chief Executive Officer, Greenlam Industries, expects a 12 to 15 percent rise in revenues in FY17.
The exports in FY16 remained almost flat for Greenlam. But Mittal hopes them to rise by about 8 to 10 percent in FY17.
The revenues of Greenlam grew by 7.5 percent in the fourth quarter of FY16 year-on-year.
Mittal says there was a 99 percent capacity utilisation in the laminates business in Q4 of FY16. So, they plan to increase capacity by 20 percent this fiscal.
Below is the transcript of Saurabh Mittal’s interview with Reema Tendulkar and Nigel D’souza on CNBC-TV18.
Reema: If you could hold us with your outlook for FY17. In Q4, you had a revenue growth of 7-7.5 percent, margins of 14 percent. How is this year going to shape up for you in revenues and margins?
A: FY17, we should be looking at a 12-15 percent kind of revenue growth. And, last year FY16, our revenue growth on an annualised basis will be closer to about 11 percent. So, we should be looking at a 12-15 percent revenue growth, and on the margin front, last year we were at about 13-13.2 percent. We should be in the band of 13.5-14 percent kind of a margin for this financial year, FY17.
Nigel: But your laminates division, if I am not mistaken, just a quarter or so ago, you had increased your capacity over there, so how is your new plant coming along. What exactly is your capacity utilisation over there and I see that your margins over there are substantially better, so you do not believe that you can do better than these 14 percent margins?
A: If you see laminates, we added capacity by about 20 odd percent last financial year in the month of September. And in Q4, we were at about 99 percent utilisation on the enhanced capacity. So, we have room to utilise more capacity and this was already expanded, so it was Brownfield expansion, it was not a new factory. And so, on the laminates, yes, we have potential to use more capacity do more because of the peak we have been at about 115 percent utilisation. So, we have room to about 12-15 percent more quantitative growth in laminates.
On the margin front, yes there has been a significant expansion especially in the laminates margin in Q4. Q4 laminates segment margin was at about 16 percent operating profit which has come in from chemicals cost reduction and also value mix growth our price points improved by about 8-10 percent. Realisation also improved by about 8-10 percent by better value mix. But in the near-term they could be some cost increases. So, overall, we should be at a 13.5-14 percent.
And also the margin you are talking about includes the margin of the flooring, the door business which last year lost money at the operating profit level. So, seeing the overall market scenario, we are stabilising two new businesses and potential costing increases if there are any. So that is the reason we are estimating at 13.5 percent.
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