May 16, 2013, 04.25 PM IST
Mithun Chittilappilly, executive director, V Guard Industries is optimistic on the days ahead as he sees good market demand coming in from the South Indian geography.
However, Chittilappilly is optimistic on the days ahead as he sees good market demand coming in from the South Indian geography.
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Below is the edited transcript of Chittilappilly’s interview to CNBC-TV18.
Q: What has led to such a significant contraction in margins to come in at about 5-5.5 percent and what could we expect going forward in terms of your margins?
A: We had almost a seven percent dip in EBITDA margins. That is due to variety of factors. One factor is that we have spent on higher advertisement and promotion expense. It is to the tune of around Rs 13.5 crore, which reduces the EBITDA by about 3.6 percent. However, this was expected by us because it was a planned spend. What is not expected is a copper price reduction. According to our method of inventory valuation, we usually take a mark-to-market (MTM) hit on inventory valuation if copper prices come down. That is to the tune of about Rs 4 crore.
We have also had some one off issues of some stocks cracking and some factory shifting expenses which is to the tune of about Rs 3 crore.
Additionally, we also have an additional provision for gratuity, which is about Rs 1 crore. There is another Rs 1 crore item which is mainly due to higher input cost, higher freight expenses and extra discount given for stabiliser and inverter product, which is to the tune of Rs 6 crore.
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