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FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » Piramal Glass posts record profit despite energy cost

Piramal Glass posts record profit despite energy cost

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Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics
Weaker rupee also hurts bottom line

Piramal Glass PLC, a major manufacturing industry with substantial export volumes, has posted record profits in the year ended March 31, 2012 with turnover crossing the Rs.5 billion milestone and profit after-tax up 18% to Rs.686 million.

Despite these results, the company’s Chairman, Mr. Vijay Shah, has told shareholders that the surge in energy cost and the depreciation of the rupee affecting imports "is serious and real."

"It will put further pressure on us in terms of low cost imports from India and China, and the price competition that would be encountered in the international market," he said in the company’s annual report.

Additionally, Piramal has posted an exchange loss of Rs.134.4 million, down from an exchange gain of Rs.57.9 million the previous year, on account of the impact of the depreciated rupee on foreign exchange loan balances at the close of the financial year.

Shah said that revenue was up 23% to Rs.5.1 billion and export sales have crossed the Rs.1 billion mark for the third consecutive year contributing almost 20% of the total turnover.

They had to establish themselves in a new and demanding but lucrative market in New Zealand and Australia. They now focused only on high-end specialty glass packaging for the export market - products which are difficult to make due to short production runs and offer feeder coloured glass.

"Several new products were designed and launched in the export market. The profitability increase was positively impacted by the export market," he said.

However, Shah said that the exceptional performance was partially marred by the unprecedented energy price increase and the rupee depreciation which considerably dented profitability particularly in the last quarter of the financial year.

"Power costs and 80% increase in furnace oil during the last quarter of the financial year (had taken place). Separately, a loss of over Rs.110 million has been booked under administrative costs as we mark to market (revalue) the forex loan balance as at 31st March 2012. This loan was obtained in the year 2009," he said.

Piramal has declared a 36% dividend for the year under review consistent with its policy of paying out 50% of distributable profits.

Shah said that the company would take all necessary action to counter the challenges of increased energy cost and the depreciated rupee by focusing on productivity increase, specialty exports and passing through some price increases in the markets.

Piramal has a stated capital of Rs.1.53 billion, reserves of Rs.688.5 million and retained earnings of Rs.980.1 million in its books. Total assets were running at Rs.6.8 billion and liabilities at Rs.3.6 billion according to its balance sheet.

The company owns 21 acres of freehold land at Ratmalana valued at Rs.700 million (the location of its old factory) and 54 acres at Nattandiya valued at Rs.99 million. Additionally it has leasehold land of 25 acres at Horana where its new factory is located valued at Rs.22.3 million and 9 acres at Nattandiya valued at Rs.1.2 million.

Net assets per share had grown to Rs.3.36 from Rs.2.94 the previous year and the Piramal share traded at a high of Rs.12.30 and a low of Rs.5.60 during the year under review. This compared to a trading range of Rs.12.40 to Rs.2.20 the previous year.

Piramal Glass of India with 56.45% is the controlling shareholder followed by Mr. M.M. Udeshi with 3.7%. The EPF (4.1%), DFCC Bank (2.3%) and the ETF (0.4%) are also among the top 20 shareholders.

The directors of the company are: Messrs. Vijay Shah (Chairman), Dr. C.T.S.B. Perera, R.M.S. Fernando, Sanjay Tiwari (CEO/Executive Director) and Sandeep Umesh Arora.
http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=57909

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