Talking to IIFL, Harpreet Singh Nibber, MD, PAIL said, “We feel that with our turnover increase, better utilization of capacity, debt level not increasing, and our margins will improve considerably. Our target is to increase our EPS by three times in next 3-5 years.”
What are the plans to raise installed capacity in the next fiscal and in medium-term during the next 3-5 years?
We are planning to raise our Capacity in two Phases
Short Term (Current Financial Year):
Brown field expansion of our foundry in Derabassi (Punjab): We are planning to increase our installed capacity from 12,000 to 16,000 MT/year. We are also working on technology upgradation as we would be moving from duplex melting (Cupola and Electrical Furnace) to 100% induction furnace (Electrical Melting).
Medium Tem (Upcoming two Years 2018-19/ 2019-20):
A green field project consisting of foundry and machine shop unit installed capacity of 24,000 MT/annum
How much capex does the company need to opt to the raise the installed capacity during next financial year or also during next three years?
Capex required for present brown field expansion would be Rs10-12cr for both foundry and machine shop.
For green field project expansion, capex required Rs60-70cr in phase1 and Rs30cr in phase2. This capex would be done in 2018-19 and 2019-20 for phase 1.
From Rs132cr turnover in 2014-15, you are aiming at clocking a turnover to Rs205cr turnover this fiscal. What are the segments that are going to contribute most in this high steep rise in turnover this year?
In the last 2-3 years, we have been aggressive in marketing wherein besides increasing our business with existing customers Tafe, M&M, Escorts we have added new customers like CNH and Brakes India. We were also preferred suppliers for new launches for our two major customers Mahindra & Mahindra for Dhruv Project and TAFE for Challenger Project, both of which received excellent response from market. This has helped us to achieve our top line targets.
You are also aiming at a turnover of Rs355crore in 2020-21. What key components will lead to this astronomical rise in turnover? For the same, what capex will be required and how do you plan to raise the capital? Give us a detail projection here.
We have recently finished expansion in our HP unit and are in process of expanding our Derabassi Unit within this year, cumulatively capacity increase of 40%. We also plan to start a green field project by March 2020. Current expansion and future expansion will help us to achieve Rs355cr turnover in 2020-2021.
What will be your project expansion plan? Are you planning to expand to new geographical locations?
As stated earlier we are planning both brown field expansion and green field expansion. Yes, we are planning to expand to new geographical locations and at present are evaluating suitable area in central and south India.
Is there any immediate plan to raise money from the equity markets?
We will raise money as and when necessary for the company. We do not feel euphoria in the market is a criteria to raise funds.
How do you see the EPS going up in next three years?
We feel that with our turnover increase, better utilization of capacity, debt level not increasing, and our margins will improve considerably. Our target is to increase our EPS by three times in next 3-5 years.
How do you cope up with the GST impact and how is your business been affected due to GST.
GST had no adverse effect on our business. Our 100% business is with OEMs. GST effect on most of the OEMs is neutral.
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