VK Singh, CEO, Shreyas Shipping in an interview to CNBC-TV18 spoke about the company’s fourth quarter earnings and the outlook going forward.He said although the economic recovery still remains challenging, the company would aim to grow revenues at 10 percent in FY17.The volume growth for the first quarter of FY17 would also be similar to that of Q4 in FY16 at around 12 percent, he said. The additional tonnage added in the fourth quarter would aid volume growth, he added.Currently, the company would have three-dry dockings by end of FY17.With regards to freight rates, he said they still remain at depressed levels both domestically and internationally. Below is the transcript of VK Singh’s interview with Reema Tendulkar and Nigel D’souza on CNBC-TV18.
Reema: When we look at your numbers on a quarter-on-quarter (QoQ) basis, it is a revenue growth of nearly 25 percent, margins at 15 percent. Can you give us a sense of how FY17 will shape up for you?
A: We have grown about 23 percent on QoQ on the revenue front and even on the cost front; we have a cost of about 12 percent which has increased also. So, basically, even going ahead in the future, we should be going in line with the present status because definitely, as you know, we have grown on the volume. We have increased around 12 percent volume with respect to the last quarter.
Reema: So, QoQ is 12 percent volume growth?
A: No, total volume growth is almost about 12 percent from Q3 to Q4. As you know, we have also added, at the end of Q4, a tonnage which is close to about 13 percent of the additional volume and we expect that volume to get utilised in the same manner going ahead in the coming quarter. So, we again expect the volume increase to take care of the additional tonnage and we have maintained the utilisation level to the same.
Of course, the market still continues to be bad and still a challenging market which has continued from the mid of the last year itself. So, we are mainly trying to improve the volume part and take the utilisation level to maximum level on the tonnage which we have so that in case, even if the market still remains depressed, we can continue to have a similar growth.
Nigel: That is good, you have done 12 percent sequential growth in terms of volumes, but you were indicating that you are going to add your capacity, capacity that is going to be added for this quarter itself. It is going to go up by nearly around 13 percent. So, in that added capacity, what is your target capacity utilisation and also, for FY17 on the whole, what kind of volume number are you looking at?
A: We are looking at the same volume. We are looking an increase to same percent. If we are having a 12 percent growth in the volume and we have also increased the tonnage to about 12 percent, if we continue to have the similar growth, then we can have the similar utilisation on the future also to go ahead. However, if we have a similar utilisation even the market remains at the same level, we should see a growth to that level because the cost is not really going to increase much because we have already had the cost effect on the vessels.
Reema: If you could just help us what will this mean in terms of your FY17 revenues and margins. To compare FY16 revenues were nearly 600 crore and margins were at 13.3 percent. Compared to this, how will FY17 revenues and margins look?
A: FY17, since this is also a challenging year which we foresee that the complete year is not going to be easy and so we look at something close to about what we have done in 2015-2016. Something similar margin in the year of 2016-2017 also.
Reema: And topline?
A: Topline definitely will grow further because we have added capacity now. So, about 10 percent growth in the topline is what we are looking at.
Nigel: Rs 660 crore is what we can look at?
A: Yes.
Nigel: What is the freight cost trend going ahead? What has it been and also what is in the dry dock pipeline?
A: Freight rates are still depressed; global market is still very depressing and challenging market, even in the international market and same goes even with the domestic market which is at quite low as of now.
As regards to dry docking, definitely we have three dry dockings at the end of this year left out of this, but the two dry docking which was supposed to be in this current quarter which we have managed to get away without having the dry docking because the new circular has come out from the Directorate General of Shipping. In lieu of dry docking we have underwater survey and that is how we have not done the dry docking and we have only three dry dockings at the end of the year.
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