Targeting 8,000T/day sugar capacity in FY17: KCP

After witnessing a mixed performance in March 2016 quarter, diversified business group KCP expects to put up a better show in FY17, GN Murty, Chief Financial Officer told CNBC-TV18.

KCP’s total income in the quarter grew 14 percent (YoY) to Rs 190.5 crore. Net loss stood at Rs 1.75 crore against a net profit of Rs 13.5 crore.

Murty said the company’s sugar business in Vietnam has improved due to uptick in sugar prices in the second half of FY16. He said KCP’s Vietnam sugar business capacity will improve from 6,500 tonnes a day to 8,000 tonnes daily.

He also said the company’s cement volumes grew to 1.5 million tonnes from 1.4 million tonnes in FY15.Below is the transcript of GN Murty’s interview with Sonia Shenoy and Latha Venkatesh on CNBC-TV18.Sonia: Can you start by telling us about the sugar business in Vietnam which has delivered a very good operational performance this fiscal? Can the next fiscal be better?A: The sugar business in Vietnam has improved during the year 2015-2015 primarily because of the improvement in international prices during the second half of the year. During the first half of the year, it was not that good, but it improved in second half and the company has also has almost completed the first phase of expansion and the balance phase of expansion is also likely to be completed in the coming one and a half year. And the full benefits of expansion of first phase is 8,000 tonnes per day would be available in the current year. And the balance expansion results will come in 1.5-2 year’s time.Latha: So, what is the capacity now and what will the capacity become? A: 6,000 tonnes is the current capacity and the capacity already expanded in the first phase which is not exactly reflected in the current year’s results is 8,000 tonnes per day.Latha: What accounted for the net loss in the fourth quarter?A: In fact, there is no net loss in the fourth quarter if you see before tax. There is in fact improvement in the fourth quarter profit. There is not exactly a loss. But the loss is what you are looking at is after tax because of the deferred tax provisions. As such there is no loss.Latha: Even then, in sugar revenues, you have actually posted lower sugar revenues. Everybody is posting higher sugar revenues. Why is that?A: There is no sugar domestically. We have not posted any lower sugar revenues.Latha: No, I am referring to full year FY16.A: Full year basis, sugar has improved substantially by 70 percent compared to last year. Current year the revenues are higher only.Sonia: So, tell us about the cement business as well. What was the cement volumes that you recorded in this quarter and in FY16 as a whole? And what is the guidance for the next year?A: Current year, as a whole, if you see, there is a very good improvement from 1.4 million to 1.5 million. Quantity basis, we have improved the sales. And also the price has increase from about earnings before interest, taxes, depreciation and amortisation (EBITDA) levels of about Rs 700 to Rs 900 per tonne. And from Rs 24 crore of last year profit, Rs 65 crore, we have posted, almost 2.5 times, substantial improvement. After tax profit, there is substantial improvement on a year-on-year basis. Cost wise, as I told you earlier, cement today is made slightly lower after tax, but before tax certainly there is improvement even compared to last quarter, last year.Sonia: So from this 1.5 million tonnes of cement in this year, how much do you think the volumes can grow in FY17?A: That depends primarily on the activity that is going on in Andhra Pradesh. If it goes u, the activity, we can only hope for improvement further. It depends completely on the activity in the capital region of Andhra Pradesh.Latha: What is your debt?A: In the KCP standalone basis, our debt is about Rs 350-360 crore and 1:1 is the ratio.Latha: And the consolidated?A: Consolidated also, not much of debt is there.Sonia: Just to get a sense of how the situation is in the Andhra Pradesh and Telangana area, how much have prices gone up in the last 2-3 months and where do you see the prices stabilise at?A: Current year, that 2016-2017 are slightly looking up, though towards the end of the year, there was slight fall in the prices. But, now it is looking up and the demand also in Andhra Pradesh and Telangana has started improving. So, we are hoping that activity that is taking place in Andhra Pradesh as well as Telangana should help with it.Latha: What does it feel like? Cement has done extremely well for you this year, a 22 percent rise in revenues and almost 40 percent rise in EBIT levels. So, is that a repeatable performance?A: That I will not be able to comment because the economy, it depends completely on the economy and the initiatives being taken there.