May 16, 2013, 03.56 PM | Source: CNBC-TV18
Dilip G Piramal, chairman, VIP Industries says the canteen store department (CSD) sales have normalised now and will grow by 11-12 percent in FY14.
“ Our trade sales also should go up anywhere between 10-20 percent. So, overall sales growth should be between 10-20 percent. ”
- Dilip G Piramal (Chairman)
CSD is a Government of India enterprise under the Indian Ministry of Defence that has depots and sub-depots in all military bases. Most goods are procured by CSD in bulk and sold at concessional rates to defence personnel.
However, the decline in CSD sales is a matter of the past as the canteen sales have become normal now, adds Piramal in an interview to CNBC-TV18.
Given the volatility in global currency rates, the company’s international business has bottomed out. "As far as margins go, it all depends on the currency rate. Otherwise, our EBITDA has gone down by about six percent last year. That is mainly because our cost of buying from abroad has gone up by about three percent. That has caused 300 basis points decrease in our margins," he elaborated.
What is also riding the wave of optimism for Piramal is the company’s launch of Skybag brand, which has helped in increasing it market share.
Below is the edited transcript of Piramal’s interview to CNBC-TV18.
Q: Do you think this entire canteen store department (CSD) issues has been fully resolved and are you feeling more confident now to talk about what kind of sales you can do in the next year?
A: From January onwards, CSD has become normal. Infact, our sales were very good because the pipeline was very slow in the first quarter of 2013,. So, we are quite optimistic about sales in the current year. Margins are something which we are not very sure about. The CSD sales should be very good. Trade sale is a question mark because the economic outlook is not all that great. Let us see these are early days yet.
Q: Your sales were up still about 8.5-9 percent which is not a great run rate. You have seen good double digit growth in the past. When do you see the basic volume growth actually picking up and where is the sluggishness kicking in from?
A: Sales were affected in all our segments last year. Particularly, the CSD segment was really bad, where the sales fell by more than 10 percent. International business also was not very good and we cut down on all loss making activities.
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Ashwani Gujral of ashwanigujral.com is of the view