Watch experts decode 'The rise of ESG investing' on October 29 at 4pm. Register Now!
Last Updated : Feb 03, 2017 10:44 AM IST | Source: CNBC-TV18

Strengthening raw material prices to impact margins: Pidilite

Pidilite Industries Limited reported a muted result for the quarter ended December 2016.

Pidilite Industries Limited reported a muted result for the quarter ended December 2016.

Speaking to CNBC-TV18, Apurva Parekh, Executive Director said the company had witnessed low raw material costs for the past few years. However, the recent increase in raw material costs may impact margins in the quarters ahead.

According to him the company may not be able to sustain the high gross margins it enjoyed for the past two years.

Parekh said demonetisation impacted both the consumer as well as industrial sales negatively. However, he does see some improvement in the quarters ahead.

Below is the verbatim transcript of Apurva Parekh's interview to Surabhi Upadhyay and Nigel D'Souza on CNBC-TV18.

Surabhi: What was the volume growth like this quarter and was there any demonetisation impact?

A: As experienced by our peers and many other companies, there was some impact on demand during Q3 and like our peers, we also had an impact on our sales growth.

As far as volume growth goes, volume growth was a little bit higher than our value growth.

Nigel: Your gross margins are closer to all-time highs and input cost have increased as well. Then what can we expect on that front going ahead?

A: Our gross margins have been very healthy for last few years. Raw material prices have been low. There has been some strengthening of raw material prices, which could have an impact on our margin in coming quarters. As we had said earlier that in last two years, we had very high gross margins and such high gross margins may not be sustainable. So we do expect to see some impact.

Surabhi: What about the exact impact, would you be able to quantify that impact on margins?

A: It would be difficult to quantify exactly what would be the impact on gross margin as it depends on multiple factors including crude oil prices, raw material prices and our response to this increases. So it would be difficult to quantify but I would like to reiterate that we had maintained during last two years that very high gross margins are not sustainable over long period of time. We would like to maintain a gross margin, which is more consistent like what we have been achieving over a five-year period.

During that period, there could be a period of higher gross margins and more like average margins.

For full interview, watch video...
First Published on Feb 2, 2017 03:25 pm