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Nov 13, 2012, 08.19 AM IST
Eveready posted a near 31 percent decline in net profit to Rs 2.08 crore for the quarter ended September 30 compared with Rs 3.03 crore in the year-ago period. Its net sales grew 12 percent to Rs 286.64 crore. During the same period last year, net sales stood at Rs 255.93 crore.
In an interview to CNBC-TV18 Amritanshu Khaitan, ED of Eveready India spoke about the financial performance of the company and the road ahead.
Below is the edited transcript of Khaitan's interview with CNBC-TV18.
Q: Tell us about the raw material pressures that you are facing and how do you hope to hold on to margins, do you think 6 percent margins will hold on or do you see them improve going ahead?
A: The operating results have improved over the last year where the turnover grew by 12 percent and the EBITDA grew by 17 percent. The cost pressure this quarter was significant due to the rupee. The rupee depreciated by 21 percent year on year for us and that had impacted our margins.
But due to price increases taken by the company we were able to maintain a 6.5-7 percent EBITDA in the quarter. Going forward, we should be able to maintain margins in the second half.
Q: Are there any more price hikes in store in order to combat the raw material pressures?
A: We continuously review our prices and keep taking prices up as and when possible. Another core raw material for us is zinc, which is quite stable. The rupee had appreciated a bit so we felt that our margin should improve, but lately we see the rupee going back to 55 levels, so we will have to take up a bit more on the price end. But, I could see margins remaining stable at 7 percent level for the year.
Q: What would be the quantum of a price hike required if the rupee continues to stay at 55 odd levels and how soon would you take it?
A: We would have to look at, at least 2-3 percent increase in prices in the next few months.
Q: Your interest cost because that has gone up quite a bit on a year on year basis. Could you tell us what the debt situation stands at and any kind of plans to reduce the debt on the books?
A: The debt at the current level is around Rs 270 crore. With interest rate being high and our working capital requirements going up, interest cost went up to 9.7 crore in the quarter compared to last year. We do have plans on how we can reduce the debt level in the company.
We have surplus land available, but due to the current scenario of the real estate market we do not see any major real estate sale taking place in the next 12 months. But due to improvement in operating results, we should be able to pare down the debt by Rs 30-40 crore this year.
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