DSIJ Mindshare

Piramal Glass

Piramal Glass came into being in 1984 through the acquisition of Gujarat Glass. In 1990 it merged with its parent company Nicholas Piramal India and in 1998 it demerged as a subsidiary with PE investors buying 46 per cent in the demerged entity. The following year it acquired Ceylon Glass Co in Sri Lanka and in 2003 Nicholas Piramal India demerged its 54 per cent holding to Kojam Fininvest that led to a listing on the bourses. In 2008, Kojam merged into Gujarat Glass which got re-listed as Piramal Glass. Excerpts from the interview:

Your company’s vision is to be amongst the top three flacconage (glass bottle) manufacturers in the world. How are you going to achieve that?
The glass sector is perceived to be very rudimentary and an old sector industry and therefore the business practices that are in use have been set so many decades ago. But Piramal Glass is one of the companies that has shown its ability to adapt to modern management systems like implementing integrated SAP across all locations, be it the US, Sri Lanka or India. A lot of time is invested in improving the business processes. There is a cell which consists of a person at the level of the vice president along with about 7-8 members whose full-time work is to ensure that the processes are world-class to enable us to reduce the lead time to produce and market our products. We have an area effectiveness team in each of our factories to daily discuss different issues to improve overall efficiency.

Similarly, there is a service effectiveness team that looks after non-manufacturing excellence and the ways to keep our customers satisfied. Thus, we have gradually been changing the entire culture of the organisation by keeping the customer in focus all the time. To further improve the business processes we have implemented a balance score card to evaluate every individual’s performance. Moreover, the company has acquired entities in foreign lands such as Sri Lanka and the US and turned them around to prove that our management bandwidth is now absolutely perfect for production, manufacturing, marketing etc.

What is your guidance for FY11 and FY12 in terms of topline, bottomline and EBIDTA margins?
We expect the company to grow at 10 to 12 per cent in topline. In terms of EBIDTA, right now we are at 21 per cent but in the next two years this will move to 28 per cent. We will achieve this by changing our product mix from low-end to high-end across the US, India and Sri Lanka. A majority of growth will come through our premium segment of C&P which is growing at 49 per cent. As of now we are generating 45 per cent of total sales from the C&P premium segment and 55 per cent from the mass segment.

Going forward we are hopeful that by FY12 our premium segment will contribute 63 per cent of our total C&P segment. That apart, we will be transitioning the capacity of our US furnace to India equivalent to one furnace by the middle of next year, the process for which has already started. Almost 13 per cent is already being manufactured from India. Therefore, an increase in the contribution from the high margin C&P segment in the total product mix along with the cost arbitrage will help us achieve growth in margins and topline.

How do you plan to manage your debts what with your debt to equity being a little more than 4.5 times?
Currently it is Rs 1,030 crore but this has been decreasing year after year. As you can see, though we raised only Rs 180 crore through our rights’ issue last year, we paid Rs 340 crore from our cash reserves. There are two aspects: one is that debt itself is going downward and secondly, the debt cost is also coming down drastically. All the loans have been re-negotiated after we repaid a part of the debt and as a result of that the debt cost has come down from 13 to 7 per cent.


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