Seen 8% vol growth in consumer, bazaar pdts biz: Pidilite

A: The top line growth in this quarter has been well below the last several quarters. Margins if you look at, at a gross margin levels have expanded over the previous quarter by about 90 basis points but because of the overall lower top line, the earnings before interest, taxes, depreciation, and amortization (EBITDA) margins certainly would not reflect that kind of expansion but what we are seeing now is a much softer input cost with oil having corrected, so in the coming quarters, the benefit of the softer input cost would play a role.

Reema: Can you quantify the extent of margin gains given the softer raw material prices as well as the price hikes that have undertaken in the December?

A: It will be very difficult to quantify a very specific expansion in the margins because it’s a combination of the product mix that you sell, the combination of overall costs but I can certainly give you one reference point that if you look at our top five raw materials this basket, if the index was 120 in July, its at about 115 in December.

Sumaira: Your consumer and bazaar products, which is actually the bulk of your business, can you give us a sense of what is the kind of volume growth that you have seen?

A: There the volume growth as been about eight percent.

Reema: Can you tell us how Brazil did and what was the revenue growth?

A: So the Brazilian business, actually the sales declined by about three percent in the quarter. The economy there is going through very tough time, the overall GDP there is not growing , the currency is under big challenge, inflation remains a concern for Brazil, so this quarter we have seen a three percent decline in top line.

Reema: And when do you expect a turnaround or a pick up in the Brazilian markets?

A: I really do not have an answer to that question. We are all hoping that maybe the new government which has come, that will do some thing to get the economy to grow faster and maybe we will have some positive tailwinds because of that.

Sumaira: So, your industrial product segment had Q2 onwards started showing some recovery. This time around you’ll have done very well at least operationally in that segment. How much better do you think you can do and with the kind of visibility now that you have for nine months and for the last quarter as well. How much better do you think you can do in this segment?

A: The overall top line growth will depend upon how the industrial activity in India picks up. We have seen the last quarter was quite challenged, the industrial growth in October was negative, November saw some pick up, December numbers are not out, so a large influence on the top line will be how the economy performs but certainly the improvement that we have seen in the profitability, that should get sustained because input costs have also eased.

Reema: Do you still have a high cost inventory or has it been depleted by now?

A: Some amount may still be there. By middle of February or by February, it would all have been consumed.