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Last Updated : Jul 26, 2016 12:33 PM IST | Source: CNBC-TV18

See textile biz revenues growing 25-30% in FY17: GHCL

Volumes for soda ash volumes are expected to remain flattish at 750 tonnes on account of seasonality (rains) factor, says RS Jalan, MD of GHCL.

Gujarat Heavy Chemicals Ltd (GHCL) posted a net profit at Rs 102.8 crore for the quarter ended June 30 as against Rs.61.6 crore in the same period last year.

Capacity utilisation of 91perent, controlled cost of raw material and overall increase in efficiency led to this kind of growth for the company, said RS Jalan, MD of GHCL.

In an interview to CNBC-TV18, Jalan said soda ash volumes are expected to remain flattish at 7.5 lakh tonnes on account of seasonality (rains) factor.

Further, the company is targeting to achieve revenue growth of 25-30 percent for textile business in FY17. Jalan expects FY17 topline to grow around Rs 1,200 crore and margins to be 15 percent.

Below is the verbatim transcript of RS Jalan's interview to Latha Venkatesh and Sonia Shenoy on CNBC-TV18.

Latha: We have noticed a bunch of chemical companies doing well. Is there any specific reason why chemicals are doing well or is this specific to your product, soda ash?

A: Our numbers are better if you look at as compared to the FY15 quarter primarily because of the three reasons one reason is our capacity utilisation is 91 percent against last year of 81 percent.

Number two is we have been able to control on the cost of raw material because of our coverage of the energy.

The third reason is primarily because of the overall efficiency improvement and the quality improvement in our raw material.

Sonia: So what kind of volumes do you foresee in your soda ash segment? Your revenues have gone up by 10 percent, but going ahead for the rest of the year what kind of volume do you see?

A: In terms of the volume last year we have achieved around 750,000 tonnes and we expect that the volumes should be in the same range of 750,000 tonnes.

Sonia: So you don’t expect it to grow this year at all?

A: In the volume terms no, we don’t expect any volume to increase.

Sonia: Why is that?

A: Because of the seasonality factor. Last year the July-September quarter, there was no rain and this industry has a major impact because of the rain and this year we expect a normal monsoon and this may have some impact on our production.

Latha: Just wanted to get a little more about the margins. Can you tell me why you are able to get your products at lower prices and you don’t have to drop your product prices too much. How come your raw material prices are lower, but your product prices haven’t fallen much? Just give us an idea of why the margins were so good?

A: Like I said in terms of the margin being better is primarily because of at what capacity you are running the plant.

Latha: And why could you run the capacity better?

A: That is primarily because of the three reasons one is our focus on the maintenance of the plant, second is the quality of the raw material what we maintain and the third is overall the motivated team.

Sonia: So you said that your volumes in the soda ash business will not grow at all this year. Tell us about the home textile business. How much do you expect those volumes to grow in FY17?

A: In this quarter our revenue has grown by 30 percent and we believe that we should be in a position to have a similar kind of a growth -- FY16 versus FY17. So we should have something around 25-30 percent growth in the topline this year.

Latha: Just wanted a word on your textile division. Can you give us some guidance of how the textile division might do?

A: Our topline should be in the range of around Rs 1,200 crore and our earnings before interest, taxes, depreciation, and amortization (EBITDA) margins should be in the range of around 15 percent.
First Published on Jul 26, 2016 10:57 am
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