In an interview to CNBC-TV18, M L Pachisia - managing director, Orient Papers & Industries shares his views on the company’s Q3 earnings.
Below is the verbatim transcript of M L Pachisia’s interview with Sumaira Abidi and Reema Tendulkar on CNBC-TV18.
Sumaira: Can you take us through what has actually damaged your operational performance this quarter?
A: If we look at the two businesses that we are in, paper and electrical business, the paper business has done better. Electrical business for the slightly lower turnover this year, this quarter versus last quarter same year because last quarter we had a major tender order from the Tamil Nadu Scheme which this year we have not participated in. But the margins have improved in the fan and the lightning business. In the appliance business which is a new business that we have entered intro it’s a period of trying to and getting into the market and therefore there have been appliance businesses is still taking time to fully take off.
Otherwise the reason why you are seeing a dip in the net profit is because of the extra expenditure that we have incurred in the area of market promotion. We have been running a campaign and which has cost us Rs 35-40 crore this year to establish the new brand. As you know, our Orient brand has now been recognized as a super brand and our campaign has also won many awards so this is a one time investment we are making in establishing the brand and that is reflecting in the bottom line.
Reema: What is the outlook looking now for the electrical consumer durables business? We understand this quarter as you said, got hit because you didn’t participate in a particular tender but are you participating in more tenders, will Q4 look better?
A: Q4 has always been traditionally the best quarter for electrical business. If you look at previous years also, electrical business has produced the best results, almost 60 percent of its profit comes in the last quarter. So, we expect the same trend to continue this year as well.
Sumaira: Aren’t you seeing any benefits from lower fuel prices this quarter? You power and fuel cost have shot up about 25 percent.
A: Our power fuel cost is based upon coal that we use in the paper business. We normally buy coal from the collieries around us. Two collieries around us had a major accident and therefore they were shut down. So, for these two quarters, last quarter and from July to December, w had to depend upon coal coming from long distances and therefore our coal cost went up. Although our efficiencies in terms of power consumed, steam consumed and coal consumed, per ton of paper has come down so money has improved sharply. But the mines have now started and we therefore expect the power and fuel cost to come down very sharply during the last quarter.
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