Operating margins may improve in short-term: Pidilite Ind

The country's largest adhesive manufacturer Pidilite Industries’ revenues rose 5.2 percent to Rs 1,320 crore in the second quarter year-on year.Speaking to CNBC-TV18, Apurva Parekh, Director of Pidilite Industries says he expects operating margins to improve in the short-term.The company’s exports have seen a slowdown and revenues were down for a couple of products in Pidilite’s portfolio, says Parekh, adding the prices of the company’s branded products will be adjusted if need be.Below is the verbatim transcript of Apurva Parekh’s interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.Sonia: It has been a big beat on your margins this time around. 23 percent margin versus 16.50 percent earlier do you expect to see further benefits of lower crude prices in second half as well?A: Yes, we expect margin to be good in the second half of the year. Latha: Will you take a chance with slightly may be lower prices but try and capture the volume game?A: We are not strictly in the volume game. We sell branded product so we are strictly not going to reduce the price just to get higher volume. However, if there is a need, if the market requires it we will consider some price adjustment. Latha: You have the advantage of lower raw material cost which is why I was asking you. In any case what do you expect will be the full year volume growth, revenue growth?A: We would not like to give guidance for the second half of the year. Generally we do not give revenue guidance. Sonia: When you say that you will continue to maintain your margins do you expect to see better than this 23 percent or will it be around this 20-23 percent range itself? A: It is difficult to predict because it depends on oil prices and it depends on input prices. However, we expect the margin to remain good. To answer earlier question if we believe that there is a need for price adjustment to maintain our market share we will certainly do that.Sonia: How are your industrial product business doing? How did it face this quarter? I mean your revenues have declined in that particular segment so are you facing a bit of pressure there?A: Our revenues have declined a bit and I think we believe that it has happened amongst our industrial portfolio in couple of product segment. We believe it is because of business or market condition. Some of our product which are supplied to industries which are export oriented there we have seen a more slowdown then in other segments. Latha: There is no denying that it is solid earnings before interest, tax, depreciation and amortization (EBITDA) performance that you have turned in. Can you do better than that? A: It is possible in short-term, in short-term it could still further improved because you have seen that the oil prices have remained soft. So, it is possible depending on how we perform on revenue growth then there could be some improvement of margin in short-term. Sonia: Can you at least give us a timeline of when the company will return to double digit topline growth?A: It is very difficult; I wish I could tell you that. It is very difficult to say that it will depend on number of circumstances all of which are not in our control but we hope to reach that level pretty soon.