What is the biggest challenge for the company
As far as volumes are concerned, new products and new markets will help us grow, but a lot depends upon what happens in the Budget. We expect to end this financial year with double-digit growth and we are talking about a 15-20% growth in volumes in the quarter to come. One needs to understand that any upswing in the input costs can be dealt with by partially absorbing or passing on the burden to the end-user. Even a moderate increase in interest rates say of 50 to 75 basis points is manageable but if the excise duty is rolled back to 14% in the Budget then we could be in for serious trouble. Therefore, one needs to wait and watch for 26 th February for a clear view on where the industry is headed.
You talked about cost control and its impact on your operating margins. Can you throw some light on the measures undertaken by the company to control costs
Cost control has been our mantra for four to five years now and for every major item of cost we have a focus team. Also, we have a value engineering team working on material costs and we look at strategic and common sourcing that enables us to choose vendors and get better prices. Even when it comes to deploying the capital expenditure, we look at lean capital investment and try to phase it out as and when required. Further, we look at lowering fixed costs and getting the best interest rates, we are a AAA rated firm. To sum up, we continue to look at every possible way of controlling cost and that has helped us maintain and improve our operating margins.
Will we see conversion of foreign currency convertible bonds soon
Not going by todays share price but taking a medium-term view, we hope to be able to convert the FCCBs. We have $195 million worth of outstanding FCCBs due for conversion in 2011 and if the stock sees 20% premium for 30 consecutive days, we may see pre-mature conversion of the FCCBs.
How much of the Rs 7,000 crore capex has been invested, and is the company looking to raise fresh funds
We have a capex plan for four years including this fiscal of Rs 7,000 crore and of this, in the period between April and December, we have made an investment of Rs 650 crore. We have a surplus of Rs 2,000 crore on our balance sheet and a debt to equity ratio of 0.39. We will be looking at divesting funds and hitting the market when required. There will be not raise funds in the fourth quarter ending March 31, 2010. However, our bank lines are all open.