Ricoh India Reports Q4 Income Up 48%

Ricoh India’s 48 percent rise in income in Q4 is mainly due to its foray into production printing, IT services and laser printers, says Manoj Kumar, Senior Vice-President and CFO. For the full year, the company posted a turnover of Rs 633 crore ($108 million USD).

Growth has been driven by the new business units like production printing, IT services and laser printers

In an interview with CNBC-TV18, Kumar said the company should continue to grow at that rate this year as well. Growth has been driven by the new business units which were introduced three years ago. In addition, existing core business units—which deal with traditional products—have also grown very handsomely.

Here are some other excerpts from the interview:

Q: The EBITDA performance of Rs 66 crore versus Rs 16 crore. Is this sustainable or is this only in terms of quarterly numbers?

A: I would say to a very large extent it is sustainable. Although it is very difficult to say as to how things will shape up in the future because market is very unpredictable.

This EBITDA growth essentially is driven by some of the very high value deals that we picked up in the company last year and also being driven by very high margin oriented new business units that we have in the company as of now.

Q: Your full year growth from Rs 430 crore to Rs 633 crore is a fairly decent 48 percent jump. What will be the pro-rata jump in FY14? Should we expect 40 percent?

A: That is very difficult to say. I do not think I will be able to answer that question. However, we went public with our intent of taking this company up to Rs 1000 crore in FY14. We look poised to achieve that kind of a growth. Rs 633 crore to Rs 1000 crore is almost around 50 percent growth.

So, the compound annual growth rate (CAGR) that we have been chasing in this mid-term plan period is about 47 percent per annum and delivered 47 percent growth last year and the year before last we delivered a growth of about 45 percent. So, we should continue to grow at that rate this year as well as to be able to reach that figure of Rs 1000 crore.

Q: Would that come with a commensurate increase in the EBITDA margins? Will you be expanding them, would they be at current levels ? If you could give us some more clarity on that, isn’t it although the losses have been reduced even then it is a loss. So, how do you get into the black?

A: The full year has not been a loss, we have broken even. In fact we have posted a small profit also because Q4 was very good for us. So, even though we had reported losses in the first three quarters of the last year, in Q4 we managed to not only wipe out all those accumulated losses but even posted a profit.

So, as far as margin EBITDA is concerned, we are a very heavily import dependent company. So, we import in US dollars and constrain the volatility of the Indian rupee vis-à-vis the US dollar. The kind of depreciation that we have seen in the Indian rupee over the last couple of months that has been the major factor why our profits came down last year, and because of which our margins were under pressure consistently.

Until the time the rupee stabilizes, we do not see that pressure letting up. So, to a very large extent we cannot say that we would be in the pink of  health. However, we are putting our best foot forward to be able to tide over this crisis and still deliver the kind of margins that our shareholders are looking for.

Also, this holds true for three of our four business units. However, we also have one business unit which is IT services which is not dependent on imports and therefore rupee depreciation vis-à-vis US dollar does not impact this business unit so much. So, that also is helping us to deliver the kind of margins that we have reported.

Q: What can you promise by way of earnings per share (EPS) growth for FY14?

A: It is very difficult to say for next year what kind of growth in terms of our earnings we will show because it much rather depends upon how the rupee behaves and that is not so much within our control. It is entirely dependent on that. It will be too premature for me to comment upon what kind of EPS we will be delivering to our shareholders next year.

Q: In terms of revenue mix for this year it was 61 percent for your core business and the rest from new businesses.

A: 61 percent came from core business unit and 39 percent came from the new businesses. New businesses as I pointed out earlier were introduced in the company a little over two years back and their share is increasing, that is not to say that the growth in the core business is slow.

Core business also is growing, but statistically we must bear in mind that if you start off with a low base the statistical growth always seems much higher which is what is happening in case of the new business units. So, their share is increasing but we still expect a major share of our total top-line to still come from our core business line.

Q: It won’t be able to cross the 50 percent mark your new businesses which is I think IT services?

A: It is predominantly driven by IT services although that is not the only new business line, we have production printing and laser printers there as well. However, whether these new businesses put together will cross 50 percent or not is very difficult to predict as of this point in time but whatever that ratio might be we want a very healthy mix between these four business units to be able to deliver profits to our shareholders.