ET NowIn a chat with ET Now, Sorab Agarwal, MD, ACE, shares his business outlook. Excerpts:
ET Now: Following the duty hike on imported CVs, will the competition reduce for you as a company?
Sorab Agarwal: As a matter of fact, I feel that import duties are still the same.
I would like to add that there is a very basic anomaly in our system. The total duty structure for imported things is about 26%, whereas in India the tax — including local consumption sales tax and other things — in some states goes up to 28%.
If possible, the duty structure should be increased for even for construction equipment. This duty hike is only for certain categories of high-end commercial vehicles. The import of these vehicles into India is negligible anyway.
ET Now: Considering the current situation, how do you see demand on the ground shaping up for you?
Sorab Agarwal: A lot of things have happened in the last six-eight months. A lot of positive talk is going on all around, but things have not changed so far at the ground level. As a company, we make construction equipment cranes which are used largely in infrastructure.
The future definitely looks bright for us, but as of now we are still languishing in terms of our order book.
ET Now: What is your current capacity utilisation? What is your outlook on volume growth in the next 12 months?
Sorab Agarwal: In 2011, we expanded most of our capacities. We doubled some, and tripled some others. But as of now, we are working anywhere between 30% to 50% of our capacities in different products — different types of cranes, loaders or tractors.
Going forward, I definitely see an improvement in the coming years. But it is very difficult to quantify. I would be happy if we reach where we were three years back in terms of numbers of equipment.
ET Now: What is your outlook on margins going ahead? What will be the key drivers?
Sorab Agarwal: In the last two-three slow years, we have been doing a lot of work with respect to controlling and maintaining costs. If the economy remains similar to what it has been in the last two-three years, we should be able to reach a 7%-8% EBITDA margin level in the next year.
In the current year, we may have around 5.5%-6%. For the next year, we are looking at a PBT of about 5-5.5% as against 2-2.5% for this year.
ET Now: What will be your growth strategy from here on? What would be your guidance on FY16 revenues as well as profits?
Sorab Agarwal: We are still facing a dilemma because on-ground things have not started changing.
However, given our past track record, I feel that if the economy reverses and things start to improve over the next three-five months, we can easily expect 30-40% growth in the coming year. If the economy normalises and becomes similar to what it was before 2008, we can in that case easily expect 60-70% growth for our company.
ET Now: Following the duty hike on imported CVs, will the competition reduce for you as a company?
Sorab Agarwal: As a matter of fact, I feel that import duties are still the same.
I would like to add that there is a very basic anomaly in our system. The total duty structure for imported things is about 26%, whereas in India the tax — including local consumption sales tax and other things — in some states goes up to 28%.
If possible, the duty structure should be increased for even for construction equipment. This duty hike is only for certain categories of high-end commercial vehicles. The import of these vehicles into India is negligible anyway.
ET Now: Considering the current situation, how do you see demand on the ground shaping up for you?
Sorab Agarwal: A lot of things have happened in the last six-eight months. A lot of positive talk is going on all around, but things have not changed so far at the ground level. As a company, we make construction equipment cranes which are used largely in infrastructure.
The future definitely looks bright for us, but as of now we are still languishing in terms of our order book.
ET Now: What is your current capacity utilisation? What is your outlook on volume growth in the next 12 months?
Sorab Agarwal: In 2011, we expanded most of our capacities. We doubled some, and tripled some others. But as of now, we are working anywhere between 30% to 50% of our capacities in different products — different types of cranes, loaders or tractors.
Going forward, I definitely see an improvement in the coming years. But it is very difficult to quantify. I would be happy if we reach where we were three years back in terms of numbers of equipment.
ET Now: What is your outlook on margins going ahead? What will be the key drivers?
Sorab Agarwal: In the last two-three slow years, we have been doing a lot of work with respect to controlling and maintaining costs. If the economy remains similar to what it has been in the last two-three years, we should be able to reach a 7%-8% EBITDA margin level in the next year.
In the current year, we may have around 5.5%-6%. For the next year, we are looking at a PBT of about 5-5.5% as against 2-2.5% for this year.
ET Now: What will be your growth strategy from here on? What would be your guidance on FY16 revenues as well as profits?
Sorab Agarwal: We are still facing a dilemma because on-ground things have not started changing.
However, given our past track record, I feel that if the economy reverses and things start to improve over the next three-five months, we can easily expect 30-40% growth in the coming year. If the economy normalises and becomes similar to what it was before 2008, we can in that case easily expect 60-70% growth for our company.
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