Piramal Glass aims to maintain 25% margins

Piramal Glass announced its fourth quarter results. The company's Q4 net profit was up at Rs 36 crore versus Rs 11 crore and the operating EBIDTA for Q4 FY11 increased by 51% to Rs 90 crores compared to Rs 60 crores for the same period previous year.

Ajay Piramal, Chairman of Piramal Group, in an interview with CNBC-TV18抯 Latha Venkatesh and Gautam Broker, gave his perspective of the fourth quarter performance and their divulged future plans.

Below is the verbatim transcript of the interview. Also watch the accompanying video.

Q: How have you done in terms of sales, both in Q4 and the full year for Piramal Glass?

A: The sales in Q4 are at Rs 329 crore. They are 18% up than the same period last year. On the whole year basis, our sales are Rs 1,218 crore which shows 10.5% increase.

Our profits have gone up significantly. For the whole year, we have now crossed an EBITDA of Rs 300 crore in terms of margin. In the Q4, our EBITDA margin was 28% and for the whole year, the margin is 25%.

Our profit after tax (PAT) has also crossed 100 crore mark. Our operations in the US two years ago were a loss. Last year, it was breakeven and this year, they have turned a profit.

Similarly, we have a plant and operations in Sri Lanka. They have also contributed and done well. Overall for the whole year, it has been satisfying.

Profits have gone up and the debt has come down. In terms of return on equity, we are now at 28% and dividend has gone up from 10% to 35% this year.

Q: Could we have a word on EBITDA margin? There is a forex gain of about Rs 6 crore this time versus the year-on-year (YoY) quarter, which had a loss of about Rs 12 crore. If you remove that, have EBITDA margins gone down slightly? Are you facing any kind of raw material pressure at this point?

A: Even for EBITDA margin for the whole year, there is no significant difference for forex. They have gone up by 5% to 25%.

Going forward, there is a huge cost increase. Two of our costs have gone up. We are foreseeing our costs going up in the next year on raw material like soda ash, etc.

Q: How much might that pressure your margins?

A: We should be able to maintain the 25% margins.

Q: How much of your revenues comes from the cosmetics and perfumery business? Will you be shifting your focus to those businesses?

A: This year, 50% of our revenues come from cosmetics and perfumes. Overall, 75% of the revenues of the company are from global customers and 25% of them are customers from India.

Q: Is there any acquisition on the anvil? Are you on the lookout for inorganic expansions?

A: As a strategy and philosophy, we believe in inorganic acquisitions. If there is a strategic fit in it and if we can create a shareholder value, then we would do it. There are not too many acquisitions in India.

The sort of market and customers that we serve, there aren抰 any other Indian companies which has the same level of quality and technology. If we at all do an acquisition, it would be more on global basis rather than on India basis.

Q: While on the subject of acquisitions, how will you utilise the cash on the Piramal Health抯 balance sheet? How much remains and what are your plans?

A: Piramal Healthcare has a board meeting next week and it will be talked about then.

Q: Can you not indicate how much is left after the buyback because it was a tidy sum that was left with the company?

A: We will talk about it next week.