See 9-10% vol growth, no price increases till Apr'14: VIP

Dilip G Piramal, Chairman,VIP Industries expects volume growth to be lower in the second half of FY14 at around 9-10%.

The Q2 FY13 volume growth had been impacted because of absolutely no sales to Canteen Stores Department (CSD). However the sales have now resumed and at normal levels, he says in an interview to CNBC-TV18. He is confident of maintaining margins at current levels of around 5-5.5 percent and expects margins to improve on back of volume growth. Since the company had taken a price increase recently in October, Piramal sees no increase maybe till April 2014. Also read: Two-wheelers to see low single digit growth in FY14: Hero Below is the verbatim transcript of his interview on CNBC-TV18 Q: Good set of numbers, income growth of 28 percent. For the second half of the year what are you forecasting in terms of volume growth? A: Volume growth will be lower in the second half because last year in the second quarter our sales in the CSD segment which is a very large segment for us and it is nearly 20 percent of our sales, had fallen. There were some internal problems within the department and we virtually sold nothing. So those sales have been resumed and at a good level because the stock levels were very low. So that has impacted the growth. Q: When you say lower volume growth what are you targeting, low single digit? A: We look at about 9-10 percent, if we do that we will be quite happy. Q: What is the expectation then on the margin front because we have seen the rupee ease a bit so that is a little positive after the big fall that we saw plus the company has undertaken price increases as well? So what could we expect by way of margins for FY14? A: We should maintain the margins that we have done. It is very difficult to say for the full year because of the exchange fluctuations. Moreover, if volumes increase margins also increase because the gross margin is quite high. So, if the volumes are good then the net margins also become much higher. Q: What about the Canteen Stores Department (CSD) segment, for the second half of the year what is the expectation there? A: CSD is doing very well, very normal and like the rest of the business our market share is more than 50 percent there. It is a very good segment because they have a very large distribution network. Our products are favored by the CSD consumers. Q: There were some issues with the payments from the CSD channel and some analysts were worried about it affecting the working capital etc, any update on that. A: Nothing new on that, CSD payments are not as good as what we get in the trade but that is part of the business and they are very secure payments. Our finance cost is not even 1 percent of our sales, our debt equity is 0.1. Q: Any more price increases that you plan to take? A: We just took one on October 26 due to the rising dollar. So I don't think now, at least till April we will take any price rise.