To: Mohan Marette who wrote (4599 ) 6/15/1999 4:06:00 PM From: Mohan Marette Respond to
Pidilite Industries - Analyst Meetpidilite.com pidilite.com Pidilite Industries s been the market leader in branded adhesives and sealant market for more than three decades. company has consistently improved its performance recording a sales and net profit growth of 16% and 33% respectively over the last five years. resent below brief synopsis of a presentation made by Mr Priyakant Patel (Vice President and Secretary), Mr A B Parekh (Director) and Mr M B Parekh (Managing Director) at an Analyst Meet held in Mumbai today. Pidilite Industries is the No 1 player in branded consumer adhesives, polymer emulsions and industrial adhesive segments, and the No 2 player in construction and paint chemicals, art materials and pigment dispersions. Branded consumer products e adhesives and sealants (48%), construction /paint chemicals (10%) and art materials (3%) together account for 61% of the company's turnover. Pidilite's other products include organic pigments (14%), industrial and textile resins (13%) and industrial adhesives (9%).Net sales growth 12.4% yoy was driven mainly by strong volume growth in all its businesses. For FY2000, the Company targets 18-20% yoy growth in the branded consumer products segment and 8-10% growth in the industrial products segmentMargins have improved significantly with increased sales thrust on high margin consumer goods as well as benefit of lower raw material prices. Price of key raw material VAM has not risen significantly in the current year also, and the company does not expect any steep jump in raw material prices in next few months. Besides, the company believes that price rise, if any, can be easily passed on to the consumer.Export sales grew by 16% yoy in FY99 to Rs308.2mn (8% of turnover). Exports have been identified as one of the thrust areas by the management. A large part of exports currently consists of pigment sales to Europe, USA, Australia, etc. The company has also commenced exports of consumer products like adhesives and art materials in the overseas markets in the last two years. The company's products have received encouraging response in markets like Sri Lanka, and it is proposed to expand market in other SAARC countries. The company targets export sales of Rs550mn in FY2000, driven by higher consumer goods exports.Improved gearing : The company has achieved a drastic reduction in interest cost by repayment of debt (Rs241.4mn) as well as effective working capital management. Working capital declined by Rs80.6mn in FY99.Restructure of businesses : The company has decided to amalgamate 100% subsidiary Pidilite Finance and group company Nebula Chemicals with itself. Pidilite Finance had a networth of Rs36.2mn, liquid funds of Rs12.5mn and leased assets Rs12.7mn as at FY99 end. Nebula Chemicals is a profit making company engaged in manufacture of consumer adhesives under license from Pidilite. The exchange ratio for the merger of Nebula Chemicals has not yet been finalized. Nebula Chemicals had a turnover of Rs188mn and recorded a net profit of Rs17mn in FY99. The company is also looking at various options to merge its marketing arm Parekh Marketing with itself.Hive off of the indutrial pigments and resins businesses is being considered. The company has been scouting for a joint venture partner for these businesses, who would bring in new technology for making this business more competitive. While these businesses are also profitable, growth prospects and margins in these segments are lower as compared to consumer product segment. The hive off of these businesses into a separate company is likely to be finalized by the end of the current financial year.Focus on branded products : The company's aim is to direct its managerial as well as financial resources towards the expansion of the branded consumer products segment. Several new consumer products like Fevi Stik Super glue stick. Feviseal EasiMix epoxy putty, Acron art materials, Prime tape, Pidifin water proofing system and Wudfin wood polish have been launched. More branded products will be launched and the company is also considering acquisition possibilities in related areas. Turnover from branded consumer products is expected to increase from 61% to 70% by FY2001. Courtesy-(Toral Modi-toral@indiainfoline.com )
