See better Q4 than Q3 as order book strong: Ratnamani Metals

Ratnamani Metals reported a weak set of third quarter earnings on Friday.

Net profit fell 35 percent year-on-year (YoY) to Rs 34.3 crore and revenue dipped 28 percent to Rs 364.1 crore (YoY).

Speaking to CNBC-TV18, Prakash M Sanghvi, CMD of Ratnamani said that the company’s orderbook stands at Rs 1184 crore and expects fourth quarter revenue to be around Rs 450 crore.Below is the verbatim transcript of Prakash M Sanghvi’s interview with Nigel D’Souza and Reema Tendulkar on CNBC-TV18. Reema: Can you walk us through the key reasons why your revenues declined 28 percent year-on-year (YoY)? A: Due to slowdown in the industry it was down but we see a good long-term visibility. We have already started our Nagaur plant also for carbon steel water pipeline and in quarter (Q4) things will improve. Nigel: Your revenues currently are only Rs 365 crore. Just a year ago you were at around Rs 500 crore on a quarterly basis. Now you are saying there is a new plant that is come as well so Q4 what can your numbers look like, your revenue look like and also your margins, now they have drifted a good 300 basis points, they are moving towards 15 percent, further pressure expected over there? A: Margins already after tax, it is about 9.5 percent. Topline had gone down. However, Q4 will be reasonably good, say about Rs 400-450 crore. Reema: Nearly 30-35 percent of your revenue comes in from the oil and gas segment, particularly for that segment could you tell us what was the revenue contraction in this quarter? A: The exact figure I don’t have but about 30-40 percent is from oil and gas and balance is from water and other industrial segments. Nigel: What is your total order book currently? A: Currently order book is about Rs 1,184 crore. Nigel: We have this minimum import price (MIP) that has come about over the weekend, what kind of impact can it have on your margins, I believe you are an exporter also so just explain that to us, how does the math work out even if you export? A: Mostly we are having are our back-to-back raw material arrangement so we will not immediately effect from any or whatever order in hands for that. Suppose something increases 3-4 percent in time to come in steel that we will definitely increase in our sales price we will quote higher according to local price. Nigel: You are talking about a 10 percent increase in steel prices, how will you manage that and also how much inventory you have, how long will that inventory last, do you have any LCs that you have got into? A: Whatever order in hands, we have are fully backed by the LC for the purchase of raw material also so there will not be any increase in our raw material. New quotation, new tenders what we are quoting with current prices. Even the supply is too much in the domestic industries also because all main producers are having low capacity utilisation. So, they will not increase 10 percent, they will increase 2-3 percent in each month or second month or something like that. (Copy edited by Sidhartha Shukla, interview transcribed by Priyanka Deshpande)