Jindal Poly expects 25% boost to margins through cost hike

Margins of Jindal PolyFilm slipped this quarter compared with the previous. The company recently undertook a series of price hikes to allay the increasing input cost. Sameer Banerjee, wholetime director of the company, in conversation with CNBC-TV18, says that the move is likely to bode well and boost margins by 25% for Jindal PolyFilms.

Below is the edited transcript of the interview. Also watch the accompanying video. Q: You have undertaken a series of price hikes can you give us a sense of what the quantum of the increase has been and how much relief it may give you on your margins?
A: We have so far taken a price hike of roughly about 6% in the last two months which should boost our margin by about 25%. Q: Can you go through what the key raw materials you use and where is this pressure coming in terms of raw material because your margins did slip to around 15% versus 24% in the previous quarter?
A: Yes, the pressure came not because of increase in raw material prices, it was more because of the dip in the polyester film prices, which dipped from Rs 220 a kg at peak to around Rs 100 a kg. This price of Rs 225 which was achieved middle of last year lasted till about October 2010 was because of a shortage of polyester film in the international market which drove prices internationally, and then in the domestic market as well. But this got corrected in the last quarter of the year, and in April-June, the prices were more or less around Rs 100-105 a kg. Raw material prices have not changed that dramatically during that period, but our other product, the BoPP films, that was more or less steady through this period. So the change that was noticed in margin was mainly because of the drop in the polyester film prices. Q: You have taken a cumulative price hike of around 6% till now. How is the demand scenario panning out for you? Are clients actually absorbing this 6% price hike and what are you working with in terms of an order book for FY12?
A: Yes, the market has taken this increase and we are hoping to increase another 2-3% for both our products