Key Highlights

Significant forex fluctuations in Sep 17 quarter resulted in some translation forex losses which apart from GST adjustments have affected the sales growth. On a like to like basis, excluding the GST impact and the translation of forex impact, the net sales growth stood at 14% on YoY basis.

The 14% sales growth was led by an organic growth of around 5% and inorganic growth of around 9% due to the acquisition of EDG Germany which is not there in Sep 16 quarter.

EAP, US and Egypt posted a robust revenue growth while growth was moderate in India and EU.

Depressed sales in India in Sep 17 quarter due to GST. India grew only by 3.4% as compared to around 15% growth otherwise on a normal run rate. GST transition is now almost over. There was stock compression seen in June 17 quarter and in Sep 17 quarter due to change in effective tax rate, lot of packaging materials needed to go the MRP change. So new labels and stickers and art works were required which all disrupted the sales.

Things will improve in Dec 17 quarter on QoQ basis and finally expects the things to restore to normalcy from Mar 18 quarter.

In India, post GST, company was able to acquire new customers in Pharma segment, which should help in further growth in non-oral care segment in India.

EU excluding Germany saw lower growth due to decline in offtake of some of the products by key customers. Expects to restore the position.

Non oral care share revenue stood at 40.9% of the total overall revenues. There were 100 bps improvements on YoY basis.

EDG Germany margins can improve further as more client addition is seen there. There is a scope for increasing capacity utilization and may be to put up further capacities going forward.

In oral care in China new customers helped in mitigating lower demand from MNC brands present in China. In China non oral care is only 33% of total business and there is plenty of scope of improvement.

No major impact due to crude prices at this stage. A 2-4% increase in polymer prices were seen but that was taken care of. Company has taken necessary price actions so as to maintain the margins. However if raw material prices keep on moving up then it will be an issue for everybody.

Net debt stood at Rs 665 crore lower by Rs 38 crore as compared to Mar 17 debt levels with average cost of interest rate at 5.9%. Debt Equity ratio stood at 0.68

The company has plans for expansions in Assam due to the prevailing tax benefits. Expansion will be more on a tolling model.

Tax rate will be around 33-34% for FY 18