Targeting a topline growth of 18-20% in FY16: PI Industries

Mangalam: How is the performance of your contract research and manufacturing services (CRAMS) business this quarter?

A: If you look at the business performance of CRAMS this quarter, it is very much inline with the expectation. Overall in the quarter, compared to the last quarter the company had 48 percent growth with a net rise of 34 percent in our profit for the quarter. Overall for the year, 20 percent and 25 percent the company has shown a growth of 22 percent with growth in the CRAMS business coming at 23.5 percent.

Ekta: What can you expect for FY16? You have done a growth of around 22 percent odd for the entire fiscal. At Rs 1,940 crore as your total income base, how much more do you think you can scale it up to in FY16? How much would maybe an average monsoon or maybe a little below average monsoon play as a risk to your earnings?

A: Last year, the season was not a good season but we tried to keep up to the mark through our innovative approaches and strategies. However, going forward the monsoons are not looking as predictable and there are certain pressures in the agriculture industry, which will continue to carry over the next year or if not the first season.

If we go through good monsoon, this should very much ease out by the end of the year. But as we look as a company, we have to chalk ourselves between 18 percent and 20 percent growth going forward and that is where PI is looking to keep going.

Ekta: How that percolates down to your margins if you did around 19 percent for FY15? How much do you think you could scale it up?

A: Our margins will continue to sustain.

Mangalam: A word on your capacity utilization because back of the envelope calculation suggest at total capacity, the revenue could be about 2,800 crore to 3,000 crore. So, what was the capacity utilisation this year and what is the target for next year?

A: The business is not linear in terms of capacity utilisation as each product has different capacity need, but we are in the middle of building up capacity and by the end of this year, we will be getting our capacities enhanced by building two new facilities which are coming up at Jambusar facility, which are very much on track as per plans. By the end of Q3, we should be inline in terms of revenues from them.

Ekta: What is the breakup between domestic revenues as well as exports? How did each of those segments do this quarter for you within 48 percent growth?

A: I don’t have them for the quarter, but definitely as I said for the year, we have done about 19 percent growth in terms of agri business and about 23.5 in export business. That’s where we are right now. However, last quarter was driven by Rs 537 crore in terms of revenue, which is about 48 percent growth from the previous year.

Ekta: Which are the markets that you supply to primarily globally?

A: Globally we are supplying to all geographies spanning across Japan, Europe, America and some parts of Latin America.

Mangalam: Sixty percent of your revenue comes from exports and going forward, will you pass on the benefits of the rupee depreciation to the consumers? Earlier you had indicated that you are going to pass on any shift in appreciation or depreciation in the currency to consumers.

A: These are contracts; terms and conditions we have with different customers. So that’s the understanding that we continue to keep because these are long-term contracts.

Mangalam: Any visibility for your contract manufacturing business?

A: As you are aware that the capacity is running up, so we see the growth to continue and we will continue to keep this growth at least for the next two to three years because we have a good order book position going forward.

Ekta: What is your order book position?

A: As I mentioned last time, about USD 550 million gone up to USD 600 million odd now.