Management Discussion & Analysis Standalone Financials Net sales of the Company grew by 13.5%. Sales of Consumer & Bazaar products grew by 15% while growth in Industrial Products was slower at 6.6%. Margins were impacted in the first half of the year due to the steep increase in prices of key inputs like VAM. Selective price increases were taken during the year and with input prices softening in the second half, margins in the fourth quarter were higher than the rest of the year. Due to the slow down in the sales growth, the Company undertook several cost conservation initiatives so as to limit the increase in costs. Consequently "EBIDTA" (earnings before interest, taxes, debrciation, exceptional items and foreign exchange differences) excluding non-operating income grew by 12.5%. As required by the Companies Act 2013, the Company reviewed and revised the useful life of its fixed assets. As a result debrciation charge for the year increased and is higher than last year by Rs. 391 million. During the year, the Company acquired the adhesive business of Bluecoat Pvt Ltd on a slump sale basis. The intangibles acquired along with the business are being amortized and this together with the higher debrciation rates, resulted in a 57% increase in the debrciation and amortization charge. Non operating income was marginally lower than last year. Based on an independent valuation, the Company made an impairment provision of Rs. 127 million towards its investment in Pulvitec, the Brazilian subsidiary. During the year, the Company offered voluntary retirement to its workmen in its units in Panvel, Kamothe and Taloja for which a charge of Rs. 49 million was taken. Consequently Profit before Tax grew by 5.9% and Profit after Tax grew by 7.1%. Consolidated Financials On a consolidated basis, net sales grew by 13.1%. During the financial year, the Company acquired 70% shareholding in Nina Waterproofing Systems Private Ltd. (NWSPL), making NWSPL a domestic subsidiary of the Company. Subsequently, in April, 2015, NWSPL acquired the water proofing business of Nina Concrete Systems Private Ltd. on a slump sale basis. NWSPL is engaged in the business of supply and installation of waterproofing systems. It may be noted that in FY 2013-14 the Company had set up two domestic subsidiaries namely Building Envelope Systems India Ltd (BESI) and Percept Waterproofing Services Ltd (PWSL). The results of the current year include the full year performance of these subsidiaries. The performance of overseas subsidiaries have shown improvement as compared to the brvious year. While aggregate sales of overseas subsidiaries grew by 14.2%, aggregate losses (PBT) declined from Rs. 180.1 million to Rs. 20.2 million this year. The Company along with its wholly owned subsidiary, Pidilite International Pte Ltd has incorporated a subsidiary Company, namely Pidilite Chemical PLC, in Ethiopia for manufacturing of adhesives, paints, varnishes etc. Consumer & Bazaar Prod Branded Consumer & Bazaar Products Segment contributed 82 % of the total net sales of the Company and grew by 15 %. Net sales of branded Adhesives and Sealants grew by 14.1 % and contributed 50 % of the total sales of the Company. Construction and Paint Chemicals grew by 17.3 % and Art Materials and other products grew by 14.3 %. Consumer & Bazaar Products sales have grown at a CAGR of 17.1 % over the last 5 years. Profit before interest and tax for the Consumer & Bazaar Products segment increased by 7.6 %. Industrial Products Industrial Products contributed 18 % of the total sales of the Company and grew by 6.6 %. Profit before interest and tax for the segment grew by 20.5% due to lower input costs. Others The "Others" segment, largely comprises manfacture and sale of Speciality Acetates. As mentioned in last year's report, the VAM plant has been modified to make a range of Speciality Acetates as import of VAM continues to remain more viable as opposed to in-house manufacture. The technology for these Speciality Acetates has been indigenously developed and these products are gaining acceptance with customers. Advertising Campaigns & Communications Fevikwik - The Instant Adhesive and Dr. Fixit - The Water Proofing Expert were the associate sponsors of the ICC World Cup 2015. Two new advertisements were unveiled during the telecast of the matches on Star Sports channel. The new Parade TV advertisement of Fevikwik focused on the brand attributes of this product as an instant adhesive, while promoting the broader message of "Todo Nahi Jodo", strengthening bonds between people. It was one of the most liked advertisements amongst the ones launched during the ICC World Cup 2015 and recorded over 2.1 million video views on YouTube. Dr. Fixit LW+ advertisement opens with a dacoit threatening a villager at gunpoint followed by the entry of a protagonist who attracts the dacoit's attention through his song that communicates the proposition of mixing Dr. Fixit LW+ in cement for waterproofing, while building new homes. Fevicol Crazy Chairs TV campaign with a humorous take on the elections scenario was launched during the General Elections last year. It voiced the common sentiment of a stable government with its message of strong bonding "Jo bhi kursi chun ke aaye, Fevicol se ban ke aaye". It garnered a good response on social media with over 1 million video views on YouTube. The new TV advertisements were launched in English, Hindi and on the regional feeds of Star Sports channel. Marketing Initiatives Fevicol's brand message of a strong bond was integrated with kabaddi sport during the Pro Kabbadi League for on-air and on-ground activities. During the live game of kabaddi, when a tackle by a raider resulted in an entrapment by the players of the opposite team, an integrated message of "Fevicol Ki Pakad, Chootegi Nahin" appeared on TV screens and on LED screens at the venues. The Fevicol Haisha advertisement was aired on the Star Sports and Star Gold channels Fevikwik Alphabet TV campaign was launched in the Southern markets. It showed multiple objects like toys, shoes and necklaces starting from each letter of the Alphabet, which could be instantly fixed by using Fevikwik. Rangeela Tempera Colours TV advertisements on channels targeted towards kids, highlighted the on-pack promotion of two unique shades of Liquid Gold and Liquid Silver and a 'Free Brush offer' on the purchase of select pack sizes. Fevistik continued to build strong brand brference among consumers through its new FAKEMAN campaign launched on General Entertainment Channels and on channels targeted towards kids. The film features a fake super hero entering the store and asking for "Fevistik, the Original Glue Stick". Digital Dr. Fixit further enhanced the online consumer experience through the relaunch of their informative and consumer friendly website www.drfixit.co.in . The website caters to both homeowners and professionals. The website includes a chat feature for consumers to engage with Dr. Fixit experts to get an immediate resolution for their waterproofing queries. It is also integrated with SMS services and a unique Dr. Fixit mobile application, for both Android and iOS users. A new interactive website - www.fevikwik.in showcasing the benefits of Fevikwik was relaunched. The website has engaging and entertaining features like #Kwikfix - a list of all the products that Fevikwik can fix instantly and KwikStories - blogs and stories by consumers on why they brfer Fevikwik. Awards The EY Entrebrneur Of The Year Award 2014 was awarded to Mr M B Parekh, Executive Chairman, Pidilite Industries Ltd, in the Consumer Products category. Pidilite received the Dun & Bradstreet Corporate Award 2014 in the chemical sector. The Economic Times Best Brands 2014 recognised efforts of the most admired brands in the Indian market. In a research conducted by Nielsen, Fevicol and Fevikwik both ranked among the best 100 brands. Fevicol was ranked as India's 45th Most Trusted Brand 2014 in Brand Equity's Most Trusted Brands survey. The Fevicol 'Crosswords' and the Fevikwik 'Object Tears' print advertisements won at Envies 2014. Fevicol Shramdaan Divas won the Silver at the Abby Awards 2014 in the Corporate Category for Public Relations. Dr. Fixit stall won the Grand Stand Award - Special Jury Recognition for the best stall at The Economic Times Acetech, in Mumbai and New Delhi, for the year 2014. Dr. Fixit Blueseal won The Economic Times Acetech Design Wall 2014 for Commitment to Excellence and Extraordinary Innovation. Dr. Fixit LW+ Shaadi - Ek Atoot Bandhan won a Bronze at EEMAX 2014 in the Best Dealer Activation Award category Dr. Fixit won the Greenest Stall Award 2014 at the CCI-India Green Building Congress, held in Hyderabad. Dr. Fixit won a Silver at the Outdoor Advertising Awards 2014 in the Real Estate & Construction category for the 'Paani Roko' campaign in Mumbai. Miscellaneous The Company's net worth (Equity Capital + Reserves) has grown from Rs. 11395 million as on 31st March, 2011 to Rs. 23494.5 million as on 31st March, 2015, giving a Compounded Annual Growth Rate (CAGR) of 19.8 %. The market capitalization of the Company on 31st March, 2015 was Rs. 308059 million and has grown at a CAGR of 33.6 % since the IPO in 1993. Other Matters The following matters are elaborated in the Directors' Report • Financial Performance • Industry Structure and Development • Outlook on Opportunities, Threats, Risks and Concerns • Risk and Adequacy of Internal Controls • Human Resources Cautionary Statement Statements in this Management Discussion and Analysis Report describing the Company's objectives, projections, estimates and expectations may be 'forward looking statements' within the meaning of applicable laws and regulations. Actual results might differ. |