Will clock revenue growth of 20% plus this fiscal: Kajaria

A: We will do better, we have targeted for 20 percent plus. Two proposed expansions have already come in in September. So revenues and turnover will be more in the second half. We should end the year at 20 percent plus.

Reema: Margins are at 14.50 percent this quarter, can you improve those as well?

A: Margins may not go up a lot – maybe be 0.50 percent but turnover will definitely go up by 20 percent plus.

Ekta: Focusing on your volume growth, what exactly was it this time in terms of this quarter because in the previous quarter we do understand it stood at around 16 percent odd in Q1 and was there any pricing-led growth as well?

A: Total revenue went up by 16 percent this quarter while volume growth was 7 percent. Pricing power was more because we sold more glazed vitrified tiles because of the expansion that took place in March. As we go along it will even out -- the difference will be about 4 to 5 percent by the year-end. So we should look at about 20 percent plus of revenue growth and about 14 to 15 percent of volume growth.

Ekta: If I look at your numbers on a sequential comparison it looks weak. For example your margins this time around were 14 percent as compared to maybe around 16 percent odd that you did in the previous quarter. Is it more of seasonality or was there something else that possibly played the numbers this time?

A: I would say it is on a sequential basis but overall if you look at it for the whole year we should look at the earnings before interest, taxes, depreciation, and amortization (EBITDA) margin of about 15 percent which would be ok. As you know, gas is a critical factor. Gas prices have almost peaked at about USD 15. Going forward, I don’t see gas price going up, it would rather come slightly down.

Reema: You have maintained that the full year revenue growth will be closer to 20 percent but this quarter, it is coming in lower. Was this on anticipated lines so did you face some pressure in the quarter which impacted you top line?

A: No. To be honest, we had no materials because the two expansions have just completed in the month of September. One at Jaxx Vitrified where we added capacity of 4.50 million square meters and one at Cosa Ceramics where we added 3 million square meters.

Both will be fully functional in the next six months and as you might be aware we are adding another 8 million square meters by sometime by end of March. So volume growth should be around at 15-16 percent as against 7 percent while top line should be around 20 percent plus as against 14-15 percent currently.

Ekta: What your pricing growth? It was around 9 percent if I am mot mistaken?

A: Pricing growth was not 9 percent. We sold more glazed vitrified tiles, which are higher-margin products. That is why you see the difference between the volume growth and the revenue growth. Going forward, the difference between volume and revenue growth should around 4-5 percent.

Ekta: So any price hike that you would be confident of taking in the coming quarters in order to augment your revenue growth. Do you see that flexibility in the demand?

A: Two positive things have happened not only for Kajaria but also for the entire industry. The Swachh Bharat Abhiyan by the Prime Minister Narendra Modi where he says he wants toilet for everybody by 2019 will ensure that the demand for the industry will be positive till 2019. The second statement made by the PM: a house for everybody by 2022 also gives good news for both tiles and sanitaryware industries.

I am sure next 7-8 years look good for the industry.

Reema: What is the growth in your non-ceramics business like sanitary-ware as well as faucets in the quarter?

A: We have hardly started faucets. We will start production sometime by March next year and as far as sanitaryware is concerned, the plant commissioned sometime in April this year but full production came only from October and this year, sanitaryware should see a turnover about Rs 60-75 crore which should be about 3.5 percent of the turnover.

Ekta: For your first half, the net profit comes to around Rs 80 crore. How much do you think you can do in profits in the second half and maybe hence what would your FY15 guidance be?

A: For FY15, full year revenues should grow at 20 percent plus. The second half will definitely be better than the first half. As far as bottom line is concerns, it should be 10-15 percent more in the second half, as compared tot the first half.