Key Highlights

FY'17 financials include financials of EDG (Germany) from Oct'16 onwards and thus are not comparable on YoY basis with FY'16.

FY'17 financials also include around Rs 9.20 crore of one time rationalization costs in India and in Columbia.

FY'17 financials also has seen around 1.5% of margin impact due to demonetisation and slowdown in Indian operations. However, the operations have returned to normalcy from Mar'17 onwards.

EDG reported net sales of around Rs 100 crore with Ebidta of around 10% and loss at PAT level. Management expects Ebidta to improve further and the company to report profits in FY'18.

Excluding these entire one off losses and expenditure, margins should have been more than 19%, which the management aims to increase further to around 20% by 2020.

Non oral care volumes grew by around 6% while the oral care volumes grew around 8% for the company in FY'17. Thus, unlike expectation, oral care market is growing and is better than the management's expectation. Non-oral care would continue to remain at around 40% of total sales going forward as well.

Management expects strong double digit growth from Indian operations going forward post stabilization of the effect of demonetisation. However, GST is a bump in the short-term. Management expects June'17 month to be tricky and expects adverse inventory effect for few months and post further clarity, things to pick up from Sep'17 onward.

For the company, excise and VAT put together came in at 17.5% and the GST rate for packaging industry came in at 18%. So it's more or less non event for the company. But how the user industry and rest of the market takes their respective rates, needs to be seen.

Company is positive on its 2020 mission. Customer development process continues to be robust for the company.

Management expects non oral care market to grow around 24% in East Asia Pacific market.

Further with restructuring in Columbia complete, the capacities have been increased by 1.7 times which was much needed given the strong demand visibility in the geography.

US and Mexico markets should see strong growth given the focus on production in their respective countries.

EU should see a ramp up in non oral care market and management expects around 20% sales growth with better margins going forward.

Company's net debt stands at around Rs 704 crore as on Mar'17, down by Rs 129 crore from Mar'16. Average interest rate stood at 6.4%.

Chinese market continues to see high operating costs, which is hurting the margins in this geography. While sales have grown up by 10%, margins are a challenge which the management will address in FY'18.

Overall, the company has good order book from Indian operations and from rest of the world to start with for FY'18. While management is bullish for FY'18, GST is the only bump going ahead.