Essel targets 20% profit growth in 2017

Packaging firm Essel Propack has posted a steady Q3 results—profits have risen 41 per cent with margins too surging higher. Speaking to Bloomberg TV India, Essel Propack vice-chairman and managing director Ashok Goel says the pass-through impact of sliding raw material costs have dented revenue growth which has been diverse across geographies. With demand revival in India, Essel expects to grow the top line by 15 per cent and bottom line 20 per cent next year as well, he said.

How has this quarter panned out especially with regards to raw material cost and how much of that have you been able to pass through? How much of the impact you have taken on your margins because of this? Raw material costs have been soft in the last two quarters. The pass-through impact has already taken place. The impact of that is anything between 3-5 per cent. The range is because different geographies have different impact. Therefore, that has subdued some of our revenue growth. Excluding the divested business and for the raw material pass-through, our underline growth has been about 5.2 per cent.

Over the last few quarters we have seen your revenue growth rate in the range of 4-5 per cent. However, during third quarter excluding the divested business, the growth is in the range of 1-2 per cent. So there has been a slack in terms of the demand. How is the demand panning out going ahead? Are you expecting a recovery going ahead and from here what is the top line and bottom line growth that you are expecting? Different geographies have tracked different numbers for us. For example, in Europe our revenue on the same currency—before translation into Rupee or Dollar—has grown by 24 per cent. But what is reported is 14 per cent because of currency translation impact. In China, we have grown little bit on non-oral business. For India, we have seen it a little flat. And this is where we expect Indian economy to do better and therefore hopefully the demand should pick up. In America also, we are seeing good traction going forward both in oral and non-oral care. In South America, Columbia is another market and we are expanding our capacities. And, hopefully we will continue to grow that business.

We grew little bit this year and by beginning of next year we will have further capacity expansion. Egypt and India have been a little bit of a downer. In India, we see demand is beginning to revive right now. And with the Indian FMCG player as well as the multinationals, we see growth next year.

We of course will go through our budgeting process next month. And I still believe we will grow the top line by 15 per cent and bottom line 20 per cent next year as well.

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