Installed capacity to grow by 8% in next 2 quarters:Nandan Denim

Nandan Denim saw a strong fourth quarter FY16 and posted a 6 percent increase in its topline growth. Of the 6 percent topline growth, 3 percent is due to higher volume and the other 3 percent is attributed to the price rise, said Govind Sharda, President of Nandan Denim.  Currently, the company has a total installed capacity of 99 mmps (million meters per annum), and it expects to take the capacity to 110 mmps in H1FY17, an increase of 8 percent, he added. The company will post a 5 percent volume growth in FY17, Sharda maintained. He also aims at a 10 percent topline growth in FY17. Below is the verbatim transcript of Govind Sharda’s interview with CNBC-TV18's Reema Tendulkar and Nigel D'Souza Nigel: We did see a small growth on the topline of around six percent. Wanted you to break that up for us. Was it because of volumes went higher, was it because of realisations, could you break that up for us? A: We had a six percent growth on the topline of which around three percent is due to the volume and around three percent is attributed to the price rise. Reema: So, it is only a three percent volume growth in Q4. What is the volume growth guidance in FY17 and what could be the extent of price hikes that you might take? A: Currently we have got an installed capacity of around 99 million metres of denim and we expect to take it to around 110 million metres by H1. So, looking to the average utilisation of around 80-85 percent we expect that we would be able to add another eight percent to it. So, I look at that around five percent volume growth is very much on the card in the financial year 2017. As to the pricing part it is difficult for us to assign any number but we are working on a multipronged strategy, how we can enhance our realisation. But it will have some bearing due to the commodity prices which is cotton, which is basic raw material into the making of denim. So, that I will keep our fingers crossed but we are working to enhance the value addition in the manufacturing process. So, we can expect a decent hike coming through the price part as well. Nigel: So, can we assume five percent volumes are going to do, maybe a five percent realisation hike. So, 10 percent topline growth for the coming year? A: Yes, that can be a very safe assumption. Nigel: Focussing on your margins then that was the big positive. Came in at around 16 percent. Is it sustainable, could you tell us how much of your revenues come in from exports, what are your margins on the exports and also what is your guidance going ahead in terms of margins? A: We are in the middle of an expansion project whereby we are creating a capacity to cater to around 80-85 percent of our yarn requirement. So far we are comfortably placed at around 50-60 percent of our yarn requirement. Going forward once the entire spinning project is commissioned which is expected in H1 only we expect our margins to further grow. The entire theme behind this project which is underway is we want to make our margins sustainable through in-house development of our products and having in-house sourcing of the basic raw material which is yarn in our case. Talking about exports see the year that has gone by we really couldn\\'t have a very significant growth on exports. We were barely at 15 percent of our total volume coming by way of exports. But going forward we are going to work seriously on the export front and we can expect a decent hike in the export volumes and therefore the topline as well.