Excise duty to cut FY11 turnover: TT Textiles
Published on Fri, Mar 04, 2011 at 16:57 | Updated at Fri, Mar 04, 2011 at 17:20 | Source : CNBC-TV18
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In an exclusive interview with CNBC-TV18’s Reema Tendulkar and Ekta Batra, Sanjay Kumar Jain, joint managing director of TT Textiles says that the company’s FY11 turnover would be hit by the excise duty imposed this budget. “Since government has just imposed the excise duty on our net-ware business, which is under a lot of pressure due to inflation from cotton yarn and raw cotton, our turnover this year would be a bit low,” he says.
The company hopes to end the year with a turnover of Rs 400 crore to Rs 500 crore. He also sees the next year turnover to be about Rs 700 crore.
Below is a verbatim transcript of Sanjay Kumar Jain’s interview with CNBC-TV18’s Reema Tendulkar and Ekta Batra. Also watch the accompanying video.
Q: Your board has given the approval selling the oil mills. Have you done any rough calculations of how much that would fetch in terms of rupees?
A: I can’t disclose details. We are under negotiations with a couple of parties separately for both of the assets. So, we should in a month to be able to give you the details.
Q: Are you all looking to sell the whole thing?
A: We have a ginning factory and oil factory in Gondal, near Rajkot in Gujarat that we plan to sell in full. We have a ginning factory in Rajula that is near Pipavav port, which is adjacent to our spinning mill. We also plan to dispose it. We have separate negotiations for both of them and hopefully, soon we will be making our final announcement.
Q: Can you give us a reason why you are divesting your updates and possible utilizations of the funds?
A: The two main reasons for going for this divesture – cotton and oil business has become extremely volatile due to its commodity nature, and it is something which we don’t find sort of speculative in nature of the business. We don’t find it in tune with our other businesses which are the reasons for the divesture. Secondly, we want to approve down our debt equity ratio and invest in projects on the value-added segment like yarn, fabric and net-ware where we are focusing the company at present. It would also be a de-risking exercise.
Q: Are you making an exit from the cotton and oil trading business? What exactly is your debt figure currently and what could it possibly come down to? What are you going to be left with post this exit?
A: It is a small section of our asset size. It doesn’t constitute more than 10% of our assets and this will bring down a debt equity ratio of about 2.5 the long-term debt equity ratio to about 2. Secondly, we will be left with all our main businesses that is cotton yarn, netted fabric and net-ware that constitutes 80% to 90% of our turnover and also our assets size.
Q: Could you tell us the exact figure of your debt?
A: The long-term debt at the end of 31st March, 2011 will be about Rs 120 crore.
Q: What you are hoping to end the year with?
A: We hope to end the year somewhere between Rs 400 crore to Rs 500 crore. Next year we are looking to end the year with a target of about Rs 700 crore. Unfortunately, because of government policies, this year our turnover would be a bit low. However, it will be made up in April 2011 since government has just imposed the excise duty on our net-ware business that is already under a lot of pressure due to inflation from cotton yarn and raw cotton. Hence, we are hoping and fighting against this move.
Q: Have you asked the government at all to actually roll this excise duty back?
A: Yes, we have very strongly asked the government to roll out the excise duty. The industry is on a one-day token protest band and closure today. We are having big rallies all across the country and have already met the finance minister
Rgds/saurabh
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