Targeting 75% capacity utilisation for FY17: NCL Industries

Capacity utilisation in the cement division has improved year-on-year, NGVSG Prasad, Executive Director & CFO, NCL Industries told CNBC-TV18.

However, capacity utilisation on a sequential basis was lower, he said.The company is operating in four segments, cement, cement bonded particle boards, ready mixed concrete and hydropower.

"In April and May, the prices were under pressure and from June onwards prices have started recovering and they are stable now", he said.

At present the company is operating at 72 percent capacity utilisation and for FY17 Prasad is hopeful of achieving 75 percent capacity utilisation.Below is the transcript of NGVSG Prasad’s interview to Latha Venkatesh and Sonia Shenoy on CNBC-TV18.Latha: This lower income one can understand, prices have been under pressure, but even the profit has not done too well in terms of the pace of growth. What was the volume that you sold as well as realisations?A: Particularly, NCL Industries is operating in four segments, cement and cement bonded particle boards and this ready mix concrete and hydel power.If you compare QoQ -- compared to the June quarter last year and June quarter this year -- even though the capacity utilisation has improved, the prices were under pressure. But if you compare the performance with the March quarter, the capacity utilisation has come down to 72 percent from 80 percent. And there was a pressure on these prices also. So, lower capacity utilisation compared to March quarter and lower price realisations, so they have affected this quarter’s performance.Sonia: Can you tell us what is the way forward for the company? What kind of operating profits would you expect to see going ahead for the next couple of quarters and also, in the cement business itself, what is the volume and the realisation that you have clocked in this time?A: March quarter, we have recorded a capacity utilisation of about 72 percent. Last year QoQ, it was only 62 percent. So, there was an improvement to the extent of 10 percent in terms of this capacity. Coming to prices, there was some pressure. But during the first two months of the last quarter, April and May, there the prices were under pressure and from June onwards, the prices have started recovering and they have started firming up and now the prices are stable, more or less.Latha: What is the earnings before interest, taxes, depreciation and amortisation (EBITDA) per tonne that you did in Q1 and what are you expecting in Q2?A: For Q1, we had an EBITDA of about Rs 600 per tonne and that is more or less similar to this March quarter performance. March quarter also we had similar EBITDA of almost Rs 650 per tonne.Sonia: In general, how is the demand shaping up currently?A: The demand is improving. That we can see clearly. During the last 4-5 months, the demand is improving and we could achieve more than 70 percent capacity utilisation continuously from the last 2 quarters.Latha: So give us an idea of what you will do in terms of an EBITDA in the full year and revenues in the full year.A: We are targeting for this year about 75 percent capacity utilisation whereas at present, we are operating at 72 percent. We are hopeful that we will be in a position to achieve that 75 percent capacity utilisation. But this EBITDA, we cannot have any target, this is purely market driven -- the prices. So we feel that this Rs 600-650 is a sustainable EBITDA.Latha: You will get into three million tonnes in March, 2017, right?A: Correct. 2.7 million tonnes to be specific.