Pidilite Industries hopes to grow 15% in medium-term

The EBITDA was up 15.2 percent at Rs 394.3 crore versus Rs 342.3 crore year on year (YoY). EBITDA margins too were up at 23.3 percent

Parekh said going forward, in each product category, they have plans for robust product development.Pidilite Industries with the famous brand that manufactures Fevicol is the market leader in adhesives and sealants, construction chemicals, hobby colours and polymer emulsions in India. Fevicol is now the largest selling adhesives brand in Asia.Below is the transcript of Apurva Parekh’s interview to Nigel D’souza and Reema Tendulkar on CNBC-TV18. Nigel: Could you tell us what was the volume growth in the past quarter? A: Our volume growth was around 10 percent. Reema: Would that mean that you have taken a price cut of 1.5-2 percent and is that something that will continue? A: It does not exactly mean that because we have a very diverse product portfolio. It also depends on mix. However, in some products we have increased the discount or done some rationalisation of prices due to continued low prices of raw material. Nigel: Talking about raw material prices, let us focus on your gross margins. They have come in by nearly around 385 basis points or thereabouts at around 55.5 percent. Do you think now it has peaked out? A: We would not like to give any specific outlook or guidance on our margin, but yes, if crude prices increase or continue to remain high, the margin may reduce a bit. Reema: On to the consumer division then. Growth was about 9.4 percent, but it is lower than the double digit growth that we have witnessed in the past few quarters. Any particular reason for that and what would be your outlook? A: No particular reason, we find that the demand scenario still continues to be a little subdued and challenging and hence, that has had impact on our growth rates. Again, we as a company do not like to give any outlook and the overall growth rate would depend on a number of factors including external factors, economic growth and the execution of our initiatives. Nigel: Let us shift focus, let us talk about the industrial division. That as well grew at a sluggish 4.2 percent. Is it going to improve? A: During the first quarter, our industrial business grew by about 4 percent. Now, industrial growth also very much depends on economic growth, growth of exports outside of India. So as some of these factors improve, our growth should improve. But, we would not like to give any specific outlook or guidance on expected growth in the coming quarters. Reema: Vinyl acetate monomer (VAM) is your key raw material. How is the pricing trend been in the quarter gone by and going forward, how do you expect it to be? A: VAM prices have continued to remain low and the VAM prices depend on two factors, crude oil and also, it depends on demand and supply factor. So, going factor it would depend on how demand and supply scenario changes around the world and how crude prices change. So the prices would depend on that and it is very difficult to estimate or have an outlook on that. Nigel: Can we expect the company to sustain the Q1 performance in FY17? Or can it even better that performance? A: To repeat myself, we would not like to give any outlook on revenue growth, however, on a medium to long term basis, we strive to achieve our historical growth rates which is around 15 percent. So, we make all the efforts and we work towards achieving that kind of growth rate, but it is very difficult to give an outlook on when that will happen. Reema: How has the international business performed? Is there a slowdown there? A: Our export business to some of the market has been doing well. Our export business to Middle East, Africa region has been doing reasonably well. However, some part of the world including Europe and USA are seeing challenging demand scenario and hence export to some of those regions as not been that good. Nigel: Could you give us an update on any kind of new launches that you have planned for this year? A: We would not, for obvious competition and other issues, we would not like to share what is in the plan for the future. However, in each of our product categories, we have a robust new product development and introduction plan and we have been doing this for many years and we continue to do this. So, each of our product categories would see some new product introduction over coming quarters or years.