Greenlam Industries saw a tepid second quarter with a 2.7 percent drop in net profit at Rs 9 crore and an 6.7 percent rise in total income at Rs 245.4 crore. But Saurabh Mittal, MD and CEO of Greenlam, says the company will try to maintain an annual growth rate of 12-15 percent in the consolidated business.
The domestic business remained flat in Q2 of current fiscal as domestic volume and realisations were lower than expected, says Mittal.
The GST rollout - which is expected in April 2017 - will help the company see higher volumes and margins.
Below is the verbatim transcript of Saurabh Mittal’s interview to Nigel D’Souza and Sumaira Abidi on CNBC-TV18.
Nigel: Give us some numbers first, on the topline I am seeing that there was a bit of a growth of around 6.5 percent in your laminates division, give us a break up. What were the volumes in this past quarter, did realizations move and also I think it is a tad bit lower than the 10-12 percent that you have told us you will do earlier?
A: You could say that on a standalone it has been a tad bit lower than what we had expected. On the consolidated level we should be able to maintain our annual growth of about 12-15 percent. So, in this quarter, laminates business grew at about 6.5 percent of which the export business grew at about 12 percent odd, the domestic business was largely flattish, the realisations actually came down in the laminates business this quarter so that went down.
Although the utilisations in terms of the capacity, it was actually at the peak, but the volume growth in sales especially in the domestic part, domestic laminate business, volume growth and realisations both were a bit lower than expected. However, we hope to pull this up in the coming quarters.
Sumaira: What about the margins for this quarter for the laminates business? Last quarter you had done 15 percent odd, this quarter it has come in below that 14 percent mark. So, where do you see it stabilising and is this like a one quarter thing?
A: Laminates, margin in Q2 is about 14.4 percent and last quarter was about 15.8 percent. So, if you look at H1, it is about 15 percent odd kind of a figure. We should be able to maintain this 14-15 percent kind of a margin in laminates, the drop in margin actually is in the new businesses of flooring and doors. Even on the veener business, the margins are higher than Q1; we are up about 15 percent odd.
However, in the new business of floor and doors although revenues have gone up but the margins have actually deteriorated more than what it was in Q1. So, on the laminates and veener business, margins are maintained and the veener business margins have actually gone up. Floor and door is where we are struggling on the margin front. The revenues are going up.
For full interview, watch video.