In an interview to CNBC-TV18, MP Taparia, managing director, Supreme Industries shares his views on the company’s Q2 numbers and his outlook for the next few quarters.Below is the verbatim transcript of MP Taparia’s interview to CNBC-TV18’s Nigel D'Souza and Reema Tendulkar
Reema: What pressured your margins in the quarter?
A: In this quarter there was a dramatic drop in the PVC prices starting from last week of August, the price has dropped by Rs 7 a kilo. So in PVC pipes business we had a negative margin due to inventory loss and the volume also had a degrowth.
Nigel: What exactly was your volume growth or degrowth for this quarter?
A: This quarter volume was having a degrowth overall of 2 percent and value growth was 7 percent.
Nigel: Going ahead given that crude prices as well have declined could you see some kind of improvement, can we see that 13-14 percent yet again?
A: We are going to see improvement quarter after quarter now onwards. The fall in crude prices resulting in polymer price fall will improve our margin. For the whole year we expect our margins to be between 13.5 to 14 percent.
Nigel: So we can see this improvement in margin from next quarter itself because currently it is only around 10.8 percent so we can see 13-14 percent in the next quarter itself?
A: Next quarter also could be close to 13 percent but for the whole year it is going to be between 13.5-14 percent.
Reema: What can you guide in terms of your revenues for FY15?
A: We expect our turnover to go up between 18-20 percent based on current raw material price. In absolute terms our turnover may be between Rs 4400 crore to Rs 4500 crore for the current year 2014-15.
Reema: Are you expecting a 10-12 percent increase in your revenues in the remaining three quarters?
A: Normally our first quarter is a lean quarter, every quarter we will be seeing a good growth and for the whole year we are fully confident.
Nigel: What is your existing capacity and what is your capacity going ahead for the next year and with a five year horizon as well?
A: We are planning an investment of nearly Rs 2250 crore to increase our capacity by around 41000 tonnes. Our current capacity is around 450,000 tonnes.
So our overall capacity will go upto 490,000 crore by end of June 30, 2015.
Nigel: All this capex is already in the price or will you be looking to raise some money?
A: We will not be raising any money, neither we will increase our borrowings. We expect to do it all from internal accruals.
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