In conversation with S Shafiulla, Chief Financial Officer, Visaka Industries Ltd

For the year 2021-22, we’re happy to share that the company has grown in all business segments in terms of revenue, expresses S Shafiulla, Chief Financial Officer, Visaka Industries Ltd

Can you shed some light on your four distinct business segments? What is your current revenue mix and how do you expect it to evolve over the next 2-3 years?   

It’s been a good year for us across all our brands. For the year 2021-22, we’re happy to share that the company has grown in all business segments in terms of revenue.   

Our Asbestos Roofing segment is the oldest one, dating back to the 1980s. It is still one of our most-lucrative businesses. This year, its revenue is Rs 841 crore (grown by 6 per cent as compared to FY21) with a share of 60 per cent of the total revenue.  

Moving on to the new-age and sustainable construction segment, our Vnext Boards & Panels’ revenue including ATUM Solar Roof is Rs 284 crore (growth of 40 per cent as compared to FY21) with a share of 22 per cent of the total revenue. The reason for this immense growth is the demand for sustainable construction, which has become clear to people and appears to be the more popular & sensible choice for people across the country.  

Once again, touching upon our sustainability goals, ATUM Solar is our answer to end the use of fossil fuels. It is an integrated solar roof that generates clean green energy to power any building – large or small. For our solar segment, the revenue has grown by 170 per cent. 

Our textile business started in 1992, a time when foreign trade was only beginning, thanks to liberalisation reforms in the country. Since then to date, we’ve come a long way and we’re proud to share that our revenue from our textile/synthetic yarn segment is Rs 247 crore (grown by 83 per cent compared to FY21 with a share of 18 per cent of the total revenue).  

We are hopeful and estimate around 15 per cent growth in the overall revenue for the coming year; the maximum being in Vnext Boards & Panels segment.  

Our company’s roofing business is expected to perform creditably, following a sustained increase in rural incomes, which should sustain demand growth. Favourable monsoons in many parts of the country will help sustain industry growth into yet another year. We expect to pass on cost increases (inputs & logistics) to customers by capitalising on the cost differential enjoyed over steel.  

Vnext  

Visaka is a leading player in the construction industry and our Vnext Fiber Cement Board & Panels have a market share, accounting for 32 per cent of the sectoral capacity. It is also the exclusive producer of the premium product - Type-A. We are working constantly to expand our distribution network and spread product awareness by engaging with opinion influencers (carpenters, architects & contractors). Based on diverse options to explore creative applications, our homegrown innovation - Vnext has developed a growing clientele in India, the Middle East and Africa. We’re expecting it to grow at a faster pace due to its environmental advantages over its competitors of plywood & gypsum and other high CO2 emitting construction products.  

ATUM   

ATUM is an integrated solar roofing system that serves all functions of a traditional roof while generating renewable energy. We manufacture integrated solar panels with a cement base, providing superior heat insulation over a traditional roof without compromising the aesthetic value of the building. In the last few years, ATUM has established itself as a trusted product deployed across segments and geographies. We are optimistic about prospects based on our government’s renewable energy commitment and resolution to moderate carbon footprint. We’ve developed applications for data centre players as well as the railways, generating repeat orders. Furthermore, we’ve also commenced exports to Africa and the Middle East, broad-basing its geographic coverage.    

The Wonder Yarn  

The Wonder Yarn, our synthetic yarn division performed creditably, maintaining traditional margins this year. The last few years proved turbulent for the textile industry due to the outbreak of the COVID-19 pandemic. Our product is widely used for purposes like premium clothing, curtains, etc. and our quality emphasis is validated by prominent downstream brands such as Donear, Siyaram Silk, Raymond, GBTL, RSWM, BSL Suitings, and Arvind Mills, among others. Since things are finally getting back to normal, the demand is back, and economic activity is also picking up. Main markets like Mumbai and Bhilwara are also back to being fully operational. We’re expecting The Wonder Yarn to do well, especially since India, as a country, concentrates on increasing its exports and signing new free trade deals.  

Our objective is to lower the Asbestos Roofing revenue share to below 50 per cent of the total revenue by increasing the share of other segments.  

Visaka Industries’ Q4FY22 standalone revenue stood at Rs 421 crore, exhibiting a healthy YoY growth of 19 per cent. What factors are responsible for this stellar outperformance?    

As I’ve mentioned earlier, our growth in volume in all the segments has led to an increase in the revenue in Q4 this year. Of course, there are other factors at play including our company’s and its employees’ work ethic along with our unwavering mission to accomplish our sustainability goals.  

Visaka Industries’ indigenously developed ATUM solar roof has been witnessing good traction with sales volumes touching 5.3 MW for FY22? What is your vision for this business segment over the next couple of years?  

ATUM is the first-of-its-kind product proudly innovated by Visaka. What makes this segment compelling within the company’s revenue mix is the virtually unlimited headroom at a time when the world is moving towards renewable energy. The competition for our solar roof is virtually non-existent. While there might be some competition with the traditional solar panel, ATUM’s robustness and functionality promise a growing market share. By the virtue of being patented in South Africa & the USA (and of course, India), we foresee a large market for our game-changing sustainable roof. Our homegrown product, with high potential, is estimated to reach full capacity utilisation down the line in the next year or two.    

With inflation leading to a rise in input costs, what cost optimisation measures are you implementing? 

We have measures in place to tackle inflation the best we can. Using alternatives of product mix, constant R&D, cost-effective measures, automation, simplifying our administrative processes, using superior technologies for our production, increasing scale of operations, identifying good quality vendors, and procuring from the nearest places are some important measures that we’re taking to optimise the rising input costs.  

Can you throw some colour on your recently completed, ongoing as well as future Capex plans? How do you fund Capex?   

We have many plans ongoing as well as in the pipeline. We have commissioned two plants – the first is our Vnext Board Greenfield expansion at Udumalpet near Coimbatore. Our plant here has an annual capacity of 50,000 mts. Secondly, we are also looking at brownfield expansion of asbestos roofing at Raebareli (Uttar Pradesh), which has an annual capacity of 1 lakh mts. So far, this Capex is being funded by internal accruals. We have future Capex plans as well but will reveal them at a later stage.