Sintex's Group Chief Executive Samir Joshipura told CNBC-TV18 that he expects the company's margins to expand at 25-30 basis points in FY17.
Building products, moulding and textiles firm Sintex Industries is on a high after a good show in the March quarter, which was marked by margin expansion and capacity addition.
Group Chief Executive Samir Joshipura told CNBC-TV18 that he expects the company's topline to grow 18-20 percent and margins to expand by 25-30 basis point in FY17.
During the fourth quarter of FY16 the company's revenue grew 8.5 percent to Rs 2,361 crore from Rs 2,176 crore in the corresponding quarter a year ago. EBITDA surged 11 percent to Rs 453 crore while margins jumped 19.1 percent during the quarter. Sintex's net income too jumped 17.6 percent to Rs 233 crore.
Joshipura said the response for textile and building materials has been good. They will contribute to the company's profiltablilty, he said.
Below is the verbatim transcript of Samir Joshipura’s interview with Sonia Shenoy & Reema Tendulkar on CNBC-TV18.
Sonia: You have had your highest ever sales in any fiscal in FY16 itself coming in at almost Rs 7,800 crore. Tell us about the expectation going ahead. What kind of growth can you eke out in FY17?
A: That is a highest revenue that we have registered this year and our expectation is that we would continue with our growth. We expect topline to be 18-20 percent increasing in the FY17 and we hope to improve margins by a notch may be 25-30 basis points which we have done this year too.
Reema: You just raised closed to about USD 110 million via Foreign Currency Convertible Bonds (FCCB) what will be equity dilution on account of that? How are you planning to utilise the funds? I believe there is a second phase of your capacity expansion being undertaken at Pipavav. Take us through all that as well as the equity dilution?
A: It is a USD 110 million that we have raised. This would be approximately 18 percent equity dilution from our current share paid up capital of Rs 44.5 crore will go to something like Rs 52.6 crore. The purpose of raising this FCCB is to invest in our CAPEX as you just mentioned. Board has just approved our second phase of spinning capacity which is going to come up in Pipavav under the Textile Upgradation Fund scheme (TUFs) scheme. We are just going live with the phase one. We have just gone live, we have capitalised on March 31st and we hope to implement similar size of capacity in next one and a half year by September 2017.
Sonia: What is the total amount that you will be investing in CAPEX so over the next two years and in phase one what is the amount invested?
A: Phase one was approximately Rs 1,900 crore. It was 306,000 spindles. Phase two, although the capacity is same but there are some common utilities which we would say on so to be lesser than something like Rs 1,700 crore.
Reema: Coming to your individual segments while textile has done very well it is a 32 percent growth that you have seen your other two segment have only seen a single digit growth, building material was up only 2 percent, Custom moulding up only 7 percent. When do you expect an improvement in these two segments?
A: Let me take you segment wise. You mentioned textile first. Textile has revenue of yarn that we had started trading last year just to get an experience of our phase one coming up. The response from the market of our initial yarn selling has been very good India as well as outside China and some of the other countries. That is why textile shows the growth.
Within building material, our largest segment is prefab segment. Prefab segment has shown 25 percent growth which is our fastest growing most profitable segment which is very good news for us. We also see the profitability nudging up because of that. Apart from that other segment within building material monolithic which we have been keeping flat consciously because there are certain issues in terms of working capital there. We have been controlling this segment since 2011, so we still continue to do it unless there is some policy or procedural changes that we are confident about. That is where if you kind of add the two up you don’t see a very large improvement but prefab is growing very fast.
Custom moulding is combination of India and overseas. India has been growing at 20 percent. Overseas has grown by 5 percent but we need to keep in mind there is a translation impact of euro. This is not a forex impact; this is a translation impact because last year to this year euro kind of has appreciated a lot.
Sonia: You were telling us about an 18-20 percent revenue growth can you just quickly break that up for us in terms of a segment wise performance. You told us about what you have done so far but going ahead how will this 18-20 percent revenue growth be broken up segment wise?
A: So, building material overall including prefab should continue a decent growth of 15-20 percent. Our custom moulding India versus combine should grow at 15 percent overseas 10 percent, India 20 percent. We are going to add revenue from our phase one spinning which has gone live this year, so we expect something like 50-60 percent of revenue. There would be a ramp up of phase, but overall 50-60 of revenue this year, probably close to Rs 900 crore.The Great Diwali Discount!
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First Published on May 31, 2016 10:17 am