See 10-15% rev growth for FY16, no price hikes: Eveready

Amritanshu Khaitan, ED, Eveready India is confident of 10-15 percent revenue growth in FY16 backed by higher growth expansions in lighting category.Speaking about the company’s overall FY15 performance and the outlook going forward he said the new product launch of LED bulbs towards end of the year is gaining market share and expected to be a major contributor of growth in coming year. He expects Rs 100-150 crore turnover from that segment in FY16.Currently the company is not looking at price increases at least upto July but will continue to watch raw material prices and currency movements and in case rupee devalues by 3-4 then would look at price increase in August, says Khaitan.On the market share front, he says for the battery segment it is around 50 percent, for lighting segment around 2-3 percent and expect LED market share to be around 10 percent by end of the year.The current debt for the company stands at Rs 200 crore, going forward Khaitan expects the interest cost in FY16 to come down by Rs 10 crore.Battery maker Eveready Industries India Ltd on Monday reported over four-fold jump in standalone net profit at Rs 5.44 crore in the fourth quarter ended March 31, 2014-15.

Below is the transcript of Amritanshu Khaitan's interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.Sonia: For FY15 as a whole you managed 11 percent growth on the topline and a very strong jump on the bottomline because of the way your interest costs have fallen. Can you give us expectations for FY16, what kind of revenue growth are you forecasting and where will the growth come in from?A: We are forecasting revenue growth between 10 percent and 15 percent in the coming year but higher growth rate should come through from our expansion in our lighting category. In the lighting category Eveready have been a recent entrant in the light-emitting diode (LED) segment which we launched in the month of January and we expect that this business over next two-three years could add significant turnover to the company as well as to the bottomline.Latha: You could eek out some realisations improvement as well. You could manage price hikes. Is there still scope?A: The current raw material basket and the way the currency is moving, we are comfortable in terms of our battery margins. In the battery category we are throwing EBITDA numbers of about 12-13 percent. When it comes to lighting business, we clocked 35 percent growth to 190 crore. In the current year, which is FY16, we expect the lighting business to grow by over 50 percent for the company and this would start throwing up positive EBITDA number. If you look at it as a company as a whole, we expanded our EBTIDA margin by 2 percent but that was primarily backed by battery price increases which we took in the last year but in the coming year we continue to see our EBITDA margins expanding. However, this time we see the lighting business adding to the margin expansion. Therefore, we are confident of hitting double digit EBITDA margins in the overall business and about 5 percent kind of EBITDA margin in the lighting category which was at a breakeven level in the year gone by.

Sonia: No more price hikes is what you are saying, you would not need to take any price hikes in at least the first half of the year?A: We are not looking at any price increase up to July, when our battery season is at its highest due to monsoon. However, we will continue to watch how prices of our raw material move as well as how the currency moves in the next three-four months. If the currency does devalue by another 3-4 percent then we would look at a price increase in the month of August.Sonia: You did mention that a big chunk of your revenue growth will be lead by the expansion in the LED segment. Can you tell us what will the LED segment revenues look like by the end of FY16?A: Since we just launched the product in February we clocked about Rs 20 crore odd last year in the LED segment. The LED market we expect to expand from 24 million bases to around 150 million as price of LED has come down and the compact fluorescent lamps (CFL) market shifts towards LED. Therefore, we think anywhere between Rs 100-150 crore should be the turnover that Eveready should generate from this new segment. This would help us tremendously boost not only topline, but even at EBITDA level we are looking at 25-30 percent growth and that should flow through towards 50-60 percent growth at a profit before tax level.Latha: What is your market share in lighting and in batteries?A: In batteries our market share is over 50 percent. In traditional lighting products our market share ranges between 2 and 3 percent but in LEDs we estimate to hit 10 percent market share by year end. Sonia: How much interest cost will go down further by and how much you plan to bring your debt down by?A: Our current debt position is around 200 crore. We have recently got credit upgrade to A+ from our rating agency  and so that along with systematic debt repayment of Rs 50-60 crore in the year should help us bring our interest cost down by another Rs 10 crore in the current fiscal.