In an exclusive interview with CNBC-TV18, Mr Ramesh Jaiswal, Joint Managing Director, Jayaswal Neco Industries, speaks about the company and his outlook going forward.

Here is a verbatim transcript of an exclusive interview with Ramesh Jaiswal on CNBC-TV18.

Q - Your sales are of INR 1,600 crore and your profit after tax PAT is INR 27 crore, so give or take that translates about to 1.4%, could you tell us why this number is so miniscule and looks like anything like additional depreciation could tilt it towards losses?

A - There are two things, which had happened last year. One, the steel market was bad with global recession. Two, we had few one time costs also which was debited from the profit or loss account, one was on account of our CDR exit costs and we had made some looses on account of foreign currency. The last one is the main plant of the facility was closed for two months on account of capital repairs.

Q - So what is the purpose of the merger that you are going through, is this a prelude to doing a QIP, raising preferential, is this for rasing some kind of serious capital, is that why you merge these entities?

A - The basic reason is that we wanted to have complete and integrated steel plant facilities. So the facilities, which we have merged are now backward integration, the steel making facilities, the rolling mill etc all this now has become a complete integrated steel plant. Today we are having one million tonne of iron making facility and now with the commissioning of our bar mill and wire rod mill we are into fully finished alloy steel market.

Q - I don’t have your first half numbers, your FY09 numbers say a profit of INR 27 crore and sales of INR 1,600 crore how will that pan out in FY10?

A - We have made a cash profit of INR 93 crore in H1 and a PAT of INR 44 crore, which is more than last full year’s performance.

Q - Will you be able to repeat it in the second half?

A - Although the steel price is a bit down but we expect that we will be able to improve on these numbers.

Q - What about your thermal power plant is that entirely operational?

A - We already have a 50 MW capacity power plant. We are now planning to implement one 300 MW power plant into a subsidiary company, which is named as Raigad Energy a subsidiary of the parent company Jayaswal Neco.

Q - So will you be raising any money for that, what is your debt situation like, what are the total interest costs per year?

A - Presently, our debt-equity ratio in the company is quite comfortable and we are at a level of 1.4. Jayaswal Neco has some plans in expansion in steel and we are looking forward for a INR 900 crore expansion by way of increasing capacity by 300,000 tonne and power plant will be coming into a subsidiary company.

Q - So any equity for this INR 900 crore?

A - Not immediately. If market support and everything goes well then we will look forward in future, we haven’t planned it immediately.

(Sourced from CNBC-TV18)