Eyeing Rs 100 crore from consumer division for FY17: RS Jalan, MD, GHCL

In the conversation with ET Now, RS Jalan, MD, GHCL talks about new launches, the company's soda ash business and plans for it's textile business. Edited excerpts.

GHCL has achieved new highs and done very well in the last few quarters. Let's talk about these diabetic friendly numbers?
We have launched some healthy product on our consumer product division. One is a herbal salt as well as a diabetic salt. As of now, it is focussed only on the southern part of the country and gradually we are moving to the other parts as well.

What is your outlook of the soda ash business? Do you think the underlying growth in your chemical business is strong?
Looking at our last few quarters, you will find some areas where we have done really well in terms of the efficiency of the production as well as the cost control on various raw materials. That has given us a good margin improvement in this business. In this business, there is a demand growth of around 5%, in the last 10 years if you look at that data. We believe that now, the way the economy is growing, probably this number of 5-6% will continue. We see a good opportunity going forward. That is the reason we are expanding in this business which we will be completing by March, 2017, 100,000 tons which will be something around 12%. We also plan to expand next year. We are expanding some portion of the soda ash as well as sodium bicarbonate. We are doubling the capacity of soda ash and sodium bicarbonate next year. So that will definitely help us to grow the top line. We are also working a lot on our efficiency and our coast which should improve margins.

Can you give me a broad breakup or your margins in the chemical business and the textile business and what would be the underlying 2-3 year growth for both these businesses?
If you look at our soda ash business, we had a EBITDA margin of around 31% last year and in the textile we had a margin of around 15%. We had a margin of around 35% in Q1 but believe that we should be able to maintain the margin of around 31-32%. We also have an anti dumping duty under review and even if that goes away, we will be able to maintain our margin of 31-32%. Next year, we are expanding our volume and that should also help us to improve our margin.

What is your strategy on the textile business? How are you looking at building market share whether it is on domestic turf or with exports?
See if you look at our quarter-to-quarter performance on the textile, we have done really good work. In this quarter, our EBITDA margins has improved by 2% point but total EBITDA growth is around 47%. We believe that we should be able to achieve margin of around 15% this year, with a higher volume. We are targeting an EBITDA margin of around 18% next year.

You were eyeing revenue of about Rs 100 crore from the consumer division for FY17. Will this growth rate be exponential for the next 3-4 years as it is a very low base?
Our top line was around Rs 40 crore at this point last year. We believe in next 3 years, we will be in a position to go up to Rs 100 crore as we are gradually expanding in that business. We have also just launched spices, honey.

How much of your total textile business is in form of exports?
We have a very robust hedging strategy on our foreign exchange over a period of time. We have a order book which is very clearly visible and based on that we do the forex coverage on that. We do not see too much of impact coming on our margins because of the forex.

Your Q1 numbers saw a phenomenal jump of about 67-68%. Do you think that was a one off jump or the growth for GHCL now for FY17 is going to be in line that?
We believe, it is possible to repeat the performance. One, we have made an investment into the green energy and that is giving us an advantage on the cost side. Second we are improving utilisation in our home textile business and these are helping us to improve our margins. But as you know our margins are not closer to the competition, we see an opportunity in going forward that we will able to achieve a better margin. Our target for the textile business next year is moving the margin from 15% to 18%.