FY17 revenue to grow 25% on back of defence orders: Solar Ind

Manufacturers of commercial explosives and explosive accessories, Solar Industries reported a good third quarter where the company witnessed a revenue gain of 20 percent to Rs 384.8 and the net profit increased by 14 percent to Rs 41 crore on a year-on-year basis.

Speaking to CNBC-TV18, Nilesh Panpaliya, CFO of Solar Ind said that the company at present has a defence order worth Rs 72 crore which will reflect on the books next fiscal and is expected to drive the revenue for FY17 up by 25 percent.Below is the transcript of Nilesh Panpaliya’s interview with Nigel D’souza and Reema Tendulkar on CNBC-TV18. Nigel: A few details. The topline looks quite good, a growth of around 20 percent, could you break that up for us? How much of it came from Coal India? What was the growth over there? And also, what was the total contribution coming in from exports and also the growth there? A: We had a very good third quarter for our company. The gross fields have growth of 20 percent. Earnings before interest, tax, depreciation and amortisation (EBITDA) has increased by 29 percent and profit before tax (PBT) has an increase of 41 percent. Now, in this export and overseas turnover contributed around Rs 126.44 crore compared to Rs 76.92 crore in Q3 FY15, saw a significant growth of almost 64 percent. Now, out of this the Coal India contribution is roughly around 24 percent which has come from Coal India. Nigel: Was there a growth in the business coming from Coal India? A: Yes, there has been a growth from the business coming from Coal India. Reema: You have also managed to improve your margins to 18 percent versus 16.8 percent. Could you walk us through the factors which led to the margin improvement and do you see it playing out even in the quarter that we are in, January to March? A: Under the present economic scenario, we had nothing but to further increase our efficiencies which led to increase in the margins. And a good season in exports also helped us to increase the margins. Reema: What can you guide in terms of revenues and margins for FY17? A: We see a very positive FY17. Reema: Any revenue figures? A: We see a 25 percent growth which should happen for our overall revenues in FY17. Nigel: Let us get your realisations. You said Coal India, the business is going higher, but are the realisations going higher then in terms of your bulk explosives? And also, can you tell us about the cartridge realisations? How were they in the last quarter and also give us some kind of numbers in terms of the volumes in this last quarter. A: In case of last quarter, for bulk, we had a volume of almost 49,000 tonnes compared to 32,000 tonnes which is a growth of almost 30 percent bulk volume. As you rightly said that prices have been under pressure in Coal India because of competition. And most of that are also accounted for the price in ammonium nitrate prices which has fallen down. But still with all our efficiencies, we have been able to maintain the margins. In case if cartridge explosives which is mostly consumed in the infrastructure and housing construction segment, because the growth has not been there in those segments, we did not a much growth, the volume has grown by around 1 percent. Reema: Any defence orders that you won in the quarter gone by, Q3 and are you bidding for any? Are you likely to convert any? A: From next year, we can have an order worth around Rs 72 crore in hand as of now which will be executed in the next year. Reema: So, Rs 72 crore of a defence order which you will execute next year? A: Right. Reema: Have you bid for any projects - defence? A: We have bid for that Nalanda BMCs project and we are still awaiting government clearances on the same. Nigel: What is your total order book? Rs 70 crore order is only from defence what is your total order book? A: From Coal India we have presently order of roughly around Rs 400 crore. Reema: So what was your total order book be? A: Including export our total order book will be as close as Rs 700 crore. Nigel: You were talking about competition in terms of one of your some of your bulk explosives etc. Who exactly is your competition? What exactly is your market share currently could you give some of the details? A: Presently our company has market share of almost around 25 percent in case of bulk explosives. Our competitors closed to us are Indian Explosives Limited who are closed to around 12 -13 percent Indian Oil Corporation (IOC) which is again having 10-12 percent then of course these are the two players. Gulf Oil is there.