on growth track

Pidilite Industries is well-known for its larg­est selling adhesives brand in Asia, Fevicol. The company classifies its sales into con­sumer and bazaar products [73% of the to­tal sales in the fiscal ended March 2009 (FY 2009)], specialty industrial chemicals [(22% of the total sales in FY 2009]. and others [vinyl acetate monomer (VAM), around 5% of the total sales in FY 2009].
The consumer and bazaar products seg­ment constitutes adhesives and sealants, con­struction and paint chemicals and art mate­rial and others. Adhesives and sealants com­prised around 50% of the total sales in FY 2009 and largely included sales of Fevicol and other sealants like M-Seal. An extensive range of consumer, craftsmen, engineering and industrial adhesives are offered under the Fevicol brand. M-Seal is used for joining and repairing, sealing, and such other applications for the consumer and craftsmen markets.
Pidilite Industries has been continuously expanding the range of adhesives and seal­ants used for building construction and inte­rior decoration. From adhesives for furni­ture, the range includes adhesives for fixing tiles, marble, and granite on various surfaces, adhesives for fixing wallpapers, and adhe­sive for laying wooden floors. Almost all these new products were developed at the R&D labs of the company. More such new products will be introduced to cater to the expanding building construction and interior decoration market.
The construction and paint chemical sub-segments made up around 17% of the total sales in FY 2009. Dr Fixit is the market leader in the retail construction chemicals market. The waterproofmg seg­ment includes Dr Fixit water bar for seal­ing constructing joints in reinforced ce­ment concrete structure. Dr Fixit Roofkote and Roofseal are products for terraces, and Dr Fixit Safeguard for internal water­proofing of walls of potable water tanks. The brand has a strong presence in seal­ing, flooring, concrete treatment & plas­tering, and such other applications.
crude derivatives, were higher, Pidilite In­dustries was able to increase the prices of its finished products in FY 2008 and H I of FY 2009. But the impact of such price in­crease always takes time given the stocks that dealers and distribution chains carry. Further, raw material prices were continu­ously rising, with crude touching a high of US$147. Thus, the operating profit margin (OPM) was lower by 310 basis points (bps) to 13.7% even though there was in­crease in finished goods prices in FY 2009. However, with the company having cleared all the high-cost inventory of raw materi­als, the low-cost inventory of raw materi­als together with price increases in the past boosted OPM 510 bps to 23.3% in QI of FY 2010. Thus, strong brands enable the company to generate better sales and mar­gin, baring short-term aberration.
Pidilite Industries is also growing its international presence through acquisitions and setting up manufacturing and market­ing facilities abroad. The co
in Gujarat, Maharashtra, Himachal Pradesh and Daman. The subsidiaries faced adverse market conditions due to economic slow­down and steep increase in input cost in HI ofFY 2009 and was negatively impacted by forex fluctuations. Steps have been ini­tiated to rationalise the product mix and other cost efficiencies.
Standalone net sales grew 4% to Rs 519.70 crore in the quarter ended June 2009 over the quarter ended June 2008. How­ever, VAM production was down by 94% to Rs 2.51 crore as against Rs 44.39 crore as it was not cost-effective to manufacture VAM in the quarter. This restricted the sales growth. Profit after tax (PAT) rose 54% to Rs 84.81 crore. Consolidated net sales were up 5% to Rs 586.80 crore and PAT 66% to Rs 83.43 crore. Losses at subsidiaries have reduced substantially. Pidilite Industries can report standalone EPS ofRs 8.3 In FY 20 I O. The current price of Rs 145 dis­counts this 17.5 times. - mpany has 13 overseas subsidiaries (four direct and nine step-down) including those with manufac­turing and marketing operations in the US, Brazil, Thailand, Singapore and Dubai. Manufacturing facilities in India are located
When prices of raw materials, largely