Mithun Chittilappilly, Managing Director, V-Guard Industries, says the company's revenue growth is likely to be impacted by the fall in copper prices.
The metal has been trading near the USD 2 per pound range because of weak demand, particularly from China, that uses almost half the global supply amid its development.
Below is the verbatim transcript of Mithun Chittilappilly's interview with Ekta Batra & Anuj Singhal on CNBC-TV18.
Anuj: How has business been for the last quarter because Q2 wasn't spectacular for you?
A: Yes, Q2 was a bit subdued both in terms of revenue growth as well as bottomline. We had a very flattish kind of revenue growth and even the bottomline was -- growth was there but the revenue growth has been flat. So we are continuing to see similar trends appearing in the following months as well primarily because few of our segments especially the wires and cables business which is linked to the copper prices as far as value is concerned, will not grow this year, in fact we are having almost 10-15 percent decline in realisation. So as far as revenue growth is concerned it may be a bit challenging but margins have expanded in the first couple of quarters and we are continuing to see that trend going forward as well.
Ekta: Majority of your revenues do come from south India. Is there any change in guidance because of what happened with Chennai?
A: Chennai probably accounts for 6 percent of the revenues, so in that sense we are not hugely dependent on Chennai but of course it is a large part of our business. We are yet to assess what is the kind of impact because preceding the rains; in fact sales were on a good momentum, not only in Chennai but in the entire Tamil Nadu but post rains we have to assess what has happened because there will be some issues like some distributors' warehouses getting flooded, most of the retailers' warehouses getting flooded, so they may be facing some cash flow problem etc. So these issues will have to assess as we deal with them in the coming months, but at this point of time I cannot particularly say that because of Chennai we will lose so much of revenues.
Anuj: Any new product line that you are planning to get into since as we have been seeing for the last two-three quarters your business has been quite stagnant for the topline?
A: We have launched kitchen appliances business a couple of years back which has been growing well but of course the growth of that has been subdued by the lack of growth in older product segments like wires and cables.
We are excited to launch some new products maybe next financial year, so we are seriously thinking about expanding the kitchen portfolio. So we will be having some announcements maybe next financial year but not this financial year.
Ekta: Your topline guidance was revised to 12 percent in FY16 versus 15 percent, so it was revised lower. Now with the uncertainty with regards to Chennai, which you mentioned, would you be revising it lower? Is it the uncertainty which might make you more cautious?
A: As I said it is difficult to comment on it because the sales growth was happening prior to the floods. There will be some disturbance. However, as I said Chennai accounts for about 5-6 percent of overall company revenue, so Chennai as a branch is probably doing something like Rs 90-100 crore per annum for us. So any effect, will be in that range, so let us say 10 percent decline in sales of Chennai this year would mean 0.5 or 0.6 percent decline on overall revenue. So it is not large enough to affect us but there will be some impact as far as Tamil Nadu as a state is concerned with Chennai roughly 40 percent or 1/3rd of their sales but overall as a company I do not think because of Chennai we will need to revise our growth downwards. I do not think that would be required but definitely sales will get affected for the next couple of month.
Ekta: So you are staying with 12 percent?
A: Yes, as of now.
