After receiving the Delhi High Court approval for demerger of Orient Abrasives and Orient Refractories, SG Rajgrahia, managing director of Orient Abrasives says Orient Refractories is most likely to be listed by January 2012.
In an exclusive interview to CNBC-TV18, Rajgrahia expects both companies to earn combined revenue of around Rs 500 crore. "The companies are expected to grow at the rate of 10-15%, on the topline Both the businesses are doing well but since we wanted independence in the operation of both the divisions both businesses are separated," he explains.
Below is an edited transcript of SG Rajgrahia抯 interview to CNBC-TV18. Also watch the accompanying video.
Q: You have got the Delhi High Court approval with respect to the demerger of Orient Abrasives and Orient Refractories. Could you tell us now with the two entities what will be the revenue that is left with respect to the Orient Abrasives? What is the growth that one can expect?
A: Refractory business should generate a revenue of about Rs 300-350 crore and Orient Abrasives that will take care of the raw materials business should generate a revenue of about Rs 150 crore. We expect combined revenue of around Rs 500 crore and both the businesses are expected to grow at the rate of 10-15% on the topline. We hope that the bottomline should grow by may be 5-10%.
Both the businesses are doing well at this point of time and we don抰 expect any change in this situation. We expect to continue to do well for quite sometime.
Q: What is the reason for this demerger? If you could backtrack and take us through the rationale worked with initially?
A: Both the businesses are quite independent of each other, although the raw material business does supply some raw materials to the refractory division. The customer profile is also different whereas the refractory supplies to all the steel companies. We are primarily a company which manufactures refractories for steel only. The raw material business feeds the refractory industry and also the abrasives industry. Hence, the focus of both the businesses is different. We wanted independence in the operation of both the divisions so that each could focus on its own business and grow independently. We thought there would be greater growth if they were separated instead of keeping them together. Globally, we have the same perception.
The power division has two parts ?one is the captive power plant in the raw materials division which meets the requirement of fused alumina production and we have certain wind turbines capacity of 11 megawatt which is green power and we supply that to the state electricity boards. It is another revenue generating area. So, it goes with the raw materials company ?Orient Abrasives and not with the refractory company.
Q: You also perhaps would have plans to list the refractories business. When can we expect that? When are you going to be applying?
A: We have received the approval of the High Court yesterday and it will take us about two months to issues the shares of Orient Refractories to the present shareholders of Orient Abrasives. Thereafter, we will submit an application to the stock exchanges for listing and I expect it to take another two months. The total timeline for listing of Orient Refractories shares should be estimated at around four months from now. So, may be in the month of January we should be listing Orient Refractories.