Rajat Agrawal, Managing Director, Gravita India is confident of their exports making a 10 percent jump in revenues within this fiscal.
Looking at an acquisition in Central-South America or a CIS country this year, the organisation is gearing up their M&A team along with organic and non-organic growth opportunities, he says in an interview with CNBC-TV18's Reema Tendulkar and Nigel D'Souza.
The metal manufacturer and exporter claims to enhance its capacity to 91,000 metric tonne from 58,000 metric tonne resulting in their total expanded unit capacity to stand at 1,49,000 metric tonne.
Below is the edited transcript of the interview:
Q: Could you take us through your exports. The last time we spoke, you were indicating that exports are likely to go up to around 60 percent. Are you maintaining that kind of guidance?
A: You are absolutely right. Last year, we did around 50 percent of our total revenue as international business and this year we are expecting much more. Our order book for the first two months trend shows that the export is going to lead more, we are expecting around 60 percent this year.
Q: What's your total order book? And break it up into exports as well as your domestic orders.
A: Last year, we had around Rs 517 crore of our topline with profit after tax (PAT) of Rs 21 crore plus. So, this year we are expecting more than Rs 400 crore to be our export book as consolidated.
Q: Just in this year itself you expect exports to jump up from 50 percent to nearly 60 percent of your revenues right?
A: Right.
Q: So what will that mean in terms of growth? And what's the growth that you are expecting in domestic market?
A: Our last five years' compound annual growth rate (CAGR) is around 34 percent and if we see last seven years, then it is 50 percent and last three years, we did very well.
In the next three years, our company is expecting to touch revenues of Rs 2000 crore with a PAT of around 5 percent, which is Rs 100 crore plus of PAT. The top management has a vision to make this company as a billion dollar company in next seven years. Accordingly, we are gearing up all our merger and acquisition (M&A) team and organic and non-organic growth opportunities.
Q: Do you have an acquisition planned this year? Have you all shortlisted a few companies? Which is the geography at which you are looking at and perhaps an acquisition?
A: We are working on Central-South America and the Commonwealth of Independent States (CIS) countries. Looking at the market scenario, it is not the right platform to reveal at this juncture but once the company finalizes it, we will come upfront immediately.
Q: But will it happen in this year?
A: Yes, we are seriously expecting to complete first acquisition in this year.
Q: How would you fund that acquisition?
A: We are practically a debt free company at the moment, just very small negligible debt of Rs 6-7 crore. So, debt leverage is great so debt is going to be the first tool to cover that acquisition.
Q: For this acquisition, what kind of debt are you looking at?
A: We are looking in this year to raise around total USD 10 million Capex to be used in our growth revenues. M&A as well as we are also planning to put up a green filed project at our Gandhidham project that is at Kandla and Mundra Port to take care of all our exports and going to be that flagship plant very soon.
Q: So just in this year how much you are expecting your capacity to improve by and to what? What's you capacity currently and what are you expecting it to be by the end of this year?
A: Presently we are having 55000 tonne of capacity at the moment and expecting to make it 80000 tonne with our capacity expansion programs at Jaipur and Gandhidham, both projects and oversees also we are enhancing our capacity. So, we are expecting to perform much better this year than the last year.
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