Emmbi sees EBITDA growing by 20 percent this year

Shares of Emmbi Industries have been buzzing recently: up 40 percent year-to-date and having quadrupled over one year.Today, too, the stock was up 9 percent amid expectations that the above-average monsoon would help the company's water conservation business.Speaking to CNBC-TV18, Emmbi's Chairman and MD Makrand Appalwar said water conservation projects contributed 15 percent to the company's revenues and this number may go up by 5 percentage points.Appalwar also expects the Emmbi's EBITDA to grow by 20 percent this year. He sees similar growth for the next four years.The company plans to spend Rs 22 crore for capacity enhancement, adding capacity of 6000 tonnes to the existing 18200 tonnes. Last year, it had a capacity utilisation of 83 percent.Below is the transcript of Makrand Appalwar’s interview to Mangalam Maloo and Latha Venkatesh on CNBC-TV18.Mangalam: You do get some part of your revenues from water conservation projects. The last time you spoke to us, you said about 15 percent. Has that increased in the wake of so far decent monsoons and what is your projection for this segment going forward?A: The large part of our domestic topline comes from water conservation. And largely, it was in the range of around 15 percent. We are expecting around 5 percent jump on the overall revenue during this year and this particular quarter, we have seen the same. So, good rainfall is helping us and that is going to be continued if the rain pattern continues to stay the same for the rest of the year.Latha: While your revenue jumped, the earnings before interest, taxes, depreciation and amortisation (EBITDA) did not jump so much. How much on a quarterly basis are you expecting the EBITDA to increase by? And year-on-year (Y-o-Y) how much might this year’s EBITDA increase?A: We are targeting a growth of close to 20 percent for this year. We had a compounded annual interest rate (CAGR) of around 29 percent last four years and now, for the four years going forward, we have targeted a CAGR of 20 percent. And if you watch it, probably our EBITDA has grown up by more than 200 basis points in the last one year and we expect it grow in a similar pace around 100 basis points during this year and close to 0.75 basis points next year. So, that is arriving in the very same pattern as our topline. But that is happening because of the change in the value added products.Mangalam: If you could tell us what your current capacity utilisation is. I believe it has increased and what your capital expenditure (capex) plan is going forward. Last year, our capacity utilisation in March was 83 percent. During this year, we are spending close to Rs 22 crore towards the capacity enhancement and we would be adding an additional capacity of 6,000 tonnes during this calendar year.Mangalam: And how much does that compare with your current capacity?A: Our present capacity is 18,200 metric tonnes.