Country's largest manufacturer of commercial explosives, Solar Industries ltd, had a rough first quarter this year. Company's Chief Financial Officer, Nilesh Panpaliya discussed with The Pioneer, all the challenges the company faced in the last few months and the road ahead.
Management believes that the rest of the financial year looks much brighter as compared to what the company went through. Nilesh said, “We have a sound order book of nearly Rs 800 crore for FY14. We have an order of Rs 1,100 crore from Coal India for three years. One year has passed but we still have orders for this year and the next financial year. We have also received orders from Hindustan Zinc, Reliance Industries and Tata Steel. “
He further added, “Our Zambia cartridge plant will start production from September and in November we are hopeful that production from our Turkey cartridge and detonator plant will commence. Once both the plants start production, our performance will improve by 10- 12 per cent.”
The company is also planning to expand its exposure to defense sector. “We are now trying to increase our exposure in defense projects and have received all the necessary licenses for it. The commercial production for defense business will begin by March 2014. We have full support from the defense ministry and hope to bag big orders in the segment,” Nilesh added.
Commenting on the company's capex plans, he said, “We have a capex of Rs 100 crore for FY14. A part of the said capex will be invested in our Turkey and Zambia plants and the rest will be used to upgrade all the machinery and technology for propellants which we plan to make for the defense sector.”
The company had posted mute numbers for the first quarter and commenting on the results, Nilesh said, “We have faced some odds in Q1 due to a fall in sales. The major reasons for this were the restriction imposed by the government due to which every shipment had to be escorted by local police. This caused delays but later the restrictions were lifted. Another problem was that of the labor unrest on Mumbai port. Also the early monsoon had a major impact on sales as the demand from road, infrastructure and mining industry dropped. “
Amid the flattish numbers, the only positive came out in the form of reduction in interest payments. “Yes this quarter our finance costs have reduced as we have paid off a part of our debt. As of now, the total gross debt on the company is of Rs 290 crore and we plan to completely pay-off this debt in the coming years. Becoming a debt free company will take some time but we will gradually reduce it in the coming years,” he further added.