For FY17, the company has plans to increase capacities which would come on stream by year-end,said Dinesh Nolkha, Managing Director, Nitin Spinners.
Nitin Spinners reported a mixed quarter where their total income was up 19 percent at Rs 190.5 crore versus Rs 160 crore of the same quarter last fiscal but the other income was lower at Rs 0.02 crore versus Rs 1.18 crore YoY. The finance costs too were up 55 percent at Rs 8.7 crore versus Rs 5.6 crore YoY. The margins for the quarter were at 18.5 percent.
Dinesh Nolkha, Managing Director, Nitin Spinners is confident of a 26-27 percent topline for FY16 and maintaining EBITDA margins around 18.5 percent.
For FY17, the company has plans to increase capacities which would come on stream by year-end, said Nolkha.
The exports too are doing well and is expected to do better going forward, said Nolkha.
The company manufactures cotton yarn and also has fabric manufacturing for knits. 80 percent of the revenues is generated from yarn and 20 percent from knits. 65 percent of revenues are from exports.
Below is the verbatim transcript of Dinesh Nolkha’s interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.
Sonia: Before I ask you about the operational improvement I just wanted to ask you about your balance sheet because your interest cost have really spiked up this time. It is still less than Rs 10 crore but it was about Rs 5 crore same time last year. What is the debt of the company now and has the debt been rising?
A: Debt has not been rising. In fact last time after our expansion plans debt has been coming down. It is now Rs 290 crore on long-term debt which we are carrying at the moment on our balance sheet. With our expansion plan, one more expansion which we have already declared it will rise again but that will be at very low interest cost.
Latha: So, this interest out go will continue to remain around Rs 9 crore?
A: Yes, this will remain around this level.
Latha: That is because of the money you loaned for your expansions?
A: Basically, yes.
Latha: Let us talk about the growth itself, you nine month average is 35 percent but the last quarter under review was less than 20 percent. Do you revert back to 35 percent in the fourth quarter and in FY17?
A: No, it will not. Basically, since we are going to increase our capacity which will be coming up in to the stream in the next financial year. So, again we will be growing at the similar space in the FY17 as such.
Latha: Similar as in 35 percent?
A: Not 35 but the average growth rate would be around 20 percent plus.
Sonia: That is for FY16 but what about for FY17, what kind of targets do you have on the topline?
A: FY17, if you see FY17 we have been already in expansion plan as we have already declared in our last quarter itself. It will be on the stream by the end of this calendar year. So, then that will have an impact on our topline as well as bottom-line because that will add to our capacities and will again start to grow.
As far as this calendar year is concerned turnovers should remain flat during the whole year and then start to rise again because of our increase.
Latha: Why would it be flat? In nine months you are 35 percent higher. Why would you be flat for the full year?
A: Already our capacity expansion has been taken up and that is fully utilised and we are not seeing any major uptick in the prices as such as on the realisations.
Latha: So when you say flat do you mean that you will do another Rs 190 crore in revenue?
A: Around that level.
Sonia: For the full year you will still be below your guidance, right? You had guided for an FY16 topline growth of 33 percent. However, now you are saying you will end only with 20 percent?
A: We should be ending bit above that 26-27 percent.
Latha: Margins you have done well, there is an improvement from 16-18.50 percent. Does it get better or do you stabilise that 18.50?
A: Typically, we think we will be able to maintain these margins. I don’t see any major improvements looking to the conditions all around the world and as well as conditions which is prevailing in our industry. We expect to maintain these margins.
Sonia: What is the outlook on exports because a lot of companies tell us that export markets like the US and Europe are slowing down quite a bit? What is your experience been?
A: As far as export is concerned we are going well. If we see on quarter to quarter basis we have maintained our exports. If we see a year-on-year we have increased our exports by nearly 30 percent.
We have lot of exposure in various parts; we are exporting to nearly 45 countries at this point of time. So, we have very well distributed our export profile. So, that gives us a very good leverage. We can switch over our product and as well as the markets very swiftly. So, that helps us in maintaining our export markets.
It is tough because of this currency value changing every time. Currency in Europe is again changing. It is now again appreciating for the euro. If euro is becoming more expensive; not bad for us so the market accordingly changed and we have to fine tune ourselves according to that.
Latha: What is your final full expansion, I mean what is your full capacity now?
A: Full capacities we have 1,50,000 spindles working for us along with 3,000 rotors. This comes around to more than 100 tonne production every day.
Latha: How much of the money comes from knitting, how much from yarn?
A: From the knitting it is nearly 20 percent and from the yarn it comes around 80 percent.
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First Published on Feb 10, 2016 09:08 am