Piramal Glass proposes 38% dividend for FY 2014

Friday, 25 April 2014 04:13 - - {{hitsCtrl.values.hits}}

Piramal Glass Ceylon PLC (PGC) has announced its year end results for the Financial Year 2013-14 with a Turnover of Rs. 5,220 million and a Profit after Tax of Rs. 835 million including the profit from the sale of the Ratmalana land of Rs. 652 million Turnover and profitability FY 2014 closed with a total Turnover of Rs. 5,220 million as against Rs. 5,501 million of FY 2013 which reflected de-growth of 5%. The Annual Turnover was contributed to by Rs. 3,774 million from the domestic market and Rs. 1,446 million from the export market. These figures reflect a 6% growth in the export market and 9% de growth in the domestic market as against that of the previous year. Sales Of the total volume of the company’s sale, the major portion was dominated by the domestic sale. This percentage of domestic sale dropped from 76% to 68% which was one of the major contributors towards the reduction of the company’s sale and profitability. During the year under review the major segments where the company had a setback, was from the sale of bottles to the Beer and the Beverages segment which amounted to a drop of almost 10,000 tons of glass bottles. The other segments too remained static during the year. Though the glass bottles are eco-friendly and reusable most of Piramal’s customers have experienced and observed a shift in trend from glass bottles to other forms of packaging which in the longer run may not be sustainable. To manage this temporary demand drop, the company had to choose between the option of reducing its production or to shift the market base to the export segment.

The export volumes bailed out the company amidst the drastic domestic sales decrease. It was motivating to achieve a growth of 28% in the export volumes during the year as compared to the previous year. Yet these additional export volumes which were mainly done in the mass segment of the international market did not fetch realisations as high as the present niche market of exports, thus affecting the profit figures as against that of last year. Yet these sales helped PGC to partly offset the decline in the domestic segment and ensure utilisation of capacity of the furnace which would have otherwise further increased product costs. The export market too had a few draw backs due to the currency fluctuations in India. The Indian rupee depreciation made the imports to India more expensive which led to price reductions having to be taken by Piramal Glass Ceylon. This also affected the profitability of the company. Still uncertainly prevails as to the conditions in the Indian market. The company made several strides in the export market during the year under review. Whilst it improved in both volumes as well as value as against the previous year, it was also successful in spreading its geographic concentration from India to other locations. The Australian market grew by almost 125% in value whilst the reliance on the Indian market reduced from 76% to 65%. The stability in the Australian market was gained with much endeavour as the company had to face many hurdles and barriers in the way of quality parameters in packaging and other hygienic conditions and to undergo stringent, time consuming approval processes. Production During the past six years of operation at the Horana plant, a continuous improvement was experienced from the production facility which contributed much to the bottom line through its productivity improvement drives. Yet due to some repairs and maintenance work the company

had to reduce its production in the second half of the financial year by approximately 20%, thus affecting the profitability. The repairs have now been successfully completed and the plant is back in 100% operation. The sales and production factors affected the profitability of the company drastically during the year. The profit from the operations was Rs. 184 million after tax as against Rs. 722 million in FY2013. All costs including raw material, packing material and other direct and indirect costs have seen a substantial increase during the year which is well reflected in the company’s profit figures. The electricity price hike in February 2013 and the erratic fluctuations of LPG gas prices too impacted the profitability negatively The low demand and the adverse conditions of the domestic market restricted the company from taking a price increase on all segments during FY 2014. Thus PGC has had to absorb the major portion of these costs which has affected the company’s performance. “We too are not excited about this year’s performance as the company could have performed much better if we had not faced the de-growth in the domestic market segment, the reduction in the production tonnage due to plant repairs and other inflationary impacts on the cost of production which have not been compensated for, neither have they been passed on to our customers this year as in past years. However we would be compelled to share part of this inflation with our customers during the FY 2015,” Piramal Glass Managing Director & CEO Sanjay Tiwari said. “Though the domestic environment does not seem to be too promising, PGC is confident and hopeful that the company would see better results in the coming year with the inroads that we have made in the international markets and the strategic initiatives taken in the domestic market,” Tiwari added. Piramal Glass Ceylon (formerly Ceylon Glass Company) is the only glass bottle manufacturing plant in Sri Lanka. It had the opportunity of coming under the umbrella of the Piramal Group in 1999. Presently Located in Horana, it has been in existence for over 55 years. The company originally at Ratmalana, was relocated at Horana in 2007 as a BOI venture under the auspices of the ‘300 factory program’ of the Mahinda Chintana. PGC at its 250 ton capacity manufacturing facility has the capability of producing glass containers in different shapes and colours for multiple industries such as food, liquor, pharmaceutical, agro chemical and soft drinks. The Piramal Group led by Ajay G. Piramal is one of India’s foremost business conglomerates. Driven by the core values of ‘Knowledge, Action, Care’, the Piramal Group has a formidable presence in healthcare, drug discovery and research, glass, real estate and financial services. The Piramal Group also pursues sustained community activities in healthcare, education, emergency medical services, and heritage restoration.