Look to grow non-oral care business in India: Essel Propack

Essel Propack is hopeful of seeing an upswing in demand from India, said Ashok Goel VC & MD of the global packaing company. The company had reported subdued revenue growth in the fourth quarter of FY16, while for the whole fiscal year revenues contracted by 6 percent. Its bottom line for the fourth quarter was boosted by higher other income and lower tax expenses. 

Revenue degrew for the last fiscal year because of divestment of its flexible packaging business and raw material pass-through, said Goel. India has been an area of concern so far as growth in its non-oral care business has been muted. Going forward, he expects revenue growth of about 12-15 percent from India in this current fiscal year.Below is the verbatim transcript of Ashok Goel’s interview with Reema Tendulkar & Nigel D'Souza on CNBC-TV18.Nigel: Your margins have improved and that has been the trend over the last few quarters. Let us talk about a chunk of your business where you get 36 percent of your revenues, it is Africa, Middle- East, South Asia, India as well as Egypt. Over there we are seeing the revenues are down by closed to around 20 percent while the margins have improved Take us through this business when exactly could we see some growth coming on the topline and what about profitability. Can we see sustenance at around 16 percent margin?A: Africa, Middle-East, South Asia is basically if you see the effect of raw material pass through and certain unit which were under excise and now covered under excise adjustment of that and also Customer-Owned-Company-Operated (COCO) model which doesn’t account for the revenues, it comes in other income. So, underlying growth in India has been about 8 percent. So, that is very important right now it is not visible in the numbers the way it is.As we go forward the current year we see a huge upswing in demand that is happening and therefore we are very hopeful and bullish about India again.Reema: What about on a consolidated basis? You have ended FY16 with revenues contracting by nearly 6 percent what would your guidance be for consolidated FY17 revenues?A: Optically it is one impact of the divestment of flexible packaging business and raw material price pass through. So, underlying business again there on a global basis has grown about 7.8 percent.Of course, we would have liked it to be 15 percent, which has not happened and main reason there is India not growing in non-oral care which was of course the macroeconomic situation as such. However, as we get forward we are seeing good demand coming back again even in India and therefore we would say that going forward next year 12-15 percent revenue growth is very achievable.Nigel: Last year you said that your profitability will go up by 20 percent that did happen so what will your profitability growth be for FY17 and also you have been talking about your non oral care business? Currently it is at around 42 percent you wanted to go towards 50 percent what is the difference in margins of oral care as well as non oral care and by when can we see your revenue contribution go to 50 percent of your non oral care business?A: Let me take the last part first, oral care and non oral care revenue share has remained the same as last year. Last year also it was about 42 percent in non oral care this year also is 42 percent. However, if you see China has grown in non oral care about 25 percent whereas India has de-grown in non oral care.Therefore, overall we have been growing in oral care and therefore on a global consolidated basis the growth in non oral care also has been the same proportion whereas we want to grow in disproportionately in non oral care, so, that has been the year which has gone by.However, going forward we still believe that we will try to breach the gap between 42 percent and 50 percent of non oral care that we will have because we are seeing demand spurt coming in India in non oral care. So, is the case in Egypt we are seeing growth in Europe and also Columbia and Mexico. China we will continue to grow so that was the last part of the question.I have been saying 20 percent growth but for last 5 years we have been growing at 33 percent but my guidance would still be 20 percent growth next year.