PGC declares 36% dividend

Piramal Glass Ceylon PLC has declared its results for the year ended March 31 2012. PGC has ensured the continuance of its upward momentum in performance by recording the highest ever profit in its history of Rs.687 m in F2012. A revenue growth of 23 percent as against last year and the profit after tax growth of 19 percent from 578 m in F2011 to Rs.687 m in F2012 has ensured the board of directors declaring a first and final dividend of 36 percent.

PGC's Chief Executive Officer and Executive Director, Sanjay Tiwari while announcing PGC's results said, "We're proud to report that we have bettered all the previous best ever results this year with this exceptional performance. This year we have ensured the sustenance and continuity of the rich harvest we started reaping from our facility at Horana."

Revenue achieved for the year was Rs 5120 m depicting a growth of 23 percent as against Rs.4163 m of the previous year.

The revenue growth of 23 percent was contributed to, by both the export as well as domestic segments. The domestic market saw a significant growth of 23 percent from Rs. 3159m to Rs. 3894 m. The major portion of growth was contributed by the liquor and food and beverage segments.

The profitability increase was positively impacted by the export market. The export product portfolio saw a marked increase in its shift from mass market to the high end premium market segment yielding higher realizations. According to Tiwari, the speciality portion of the total export basket is growing steadily as per strategy. In addition, during the year the company has been able to set footage and establish a market for itself in New Zealand and Australia. The company ensured that the export sales crossed the Rs. 1b for the third consecutive year. This is a contribution of almost 25 percent of the total turnover. Several new products were also designed and launched in the export market which yielded high realisation to the profitability .

The focus on manufacturing excellence too gained momentum during the year with the company achieving level 2 of the manufacturing excellence in the 2nd Quarter of the FY 12. "This has made a significant contribution towards streamlining of production processes, which in turn has helped us achieve high productivity levels" said Sanjay Tiwari.

The earning per share increased by 18 percent to Rs 0.72 per share as against Rs 0.61 per share.

Quarterly Results - Q4 F 12

The turnover for the Q4 F 12 grew by 23percent from Rs. 1,102m in F11 Q4 to Rs. 1,360m. Yet amidst this significant growth of top line, the Profit After Tax fell

to a mere 7 percent of sales at Rs 98m during the quarter as against Rs 178m and 16 percent of sales it achieved during the similar period of the previous year.

The main contributory factors contributing towards this drop in performance figures was the energy price increase and the dollar depreciation.

The unprecedented increase in energy prices during mid February 2012 created much concern. The ever increasing LPG Gas prices , electricity tariff and furnace oil impacted negatively in the last quarter.

The price of furnace oil increase of 80 percent and the electricity tariff increase of 15 percent has laid a heavy burden on the cost parameter.

Tiwari said that the company never anticipated an overnight increase of this magnitude. "In fact the relevant authorities were requested to phase out such increases so that the burden can be absorbed by the consumers over a period of time".

The company has had no option but to pass off some part of the cost increase to its customer. Yet this pricing strategy does not hold true and sustain in the international market. This would end up with the company losing the market it has created for itself in the international shores with much effort. Tiwari urged the government to be more cautious when increases of this magnitude are brought in. "Increases should be done in a phased out manner which could be gradually absorbed by the industry.

Any such further increases would definitely bring about a question mark on the sustainability of the manufacturing industry itself". The rupee depreciation too had a significant impact on the Foreign Exchange Loan the Company has obtained in 2009.

A loss of over Rs. 100M has been booked under administrative costs by revaluing the closing balance of the US Dollar loan at March 31, 2012 rates.

"We are confident that with the growing domestic market, coupled with the potential of the premium export market, the company would continue to strive towards excellent performance in the future thus achieving our Vision .