Pidilite Industries Limited, India's leading manufacturer of adhesives, sealants and construction chemicals reported a sharp drop in its earnings and profits during first quarter of the current year.

 

Company's standalone net sales stood at Rs 768 crore declining by 57% over the same quarter last year with underlying sales volume and mix decline of 58.3%. This was driven by 58.6% decline in sales volume and mix of Consumer & Bazaar and 53.7% decline in sales volume & mix of Business to Business.

 

EBITDA before non-operating income stood at Rs 97 crore and declined by 77% over the same quarter last year,

 

Profit before Tax stood at Rs 77 crore declined by 82% over the same quarter last year.

 

PAT at Rs 57 crore declined by 80% over the same quarter last year. Effective tax rate for the period has been reduced from 32.5% to 26.3% due to reduction in corporate tax rate.

 

Q1 performance was significantly impacted by continued lockdowns due to the pandemic. On an overall basis, the company had a near complete closure in April 20 with recovery from May 20 onwards (broadly 50% of outlets being open) and June (saw broadly 80% of outlets open). The recovery has continued in July.

 

From a geographical perspective, the metros have been the most impacted. The Western and Northern regions are more impacted than South and East. Consumer and Bazaar businesses have seen a swifter demand recovery, especially in rural areas and semi urban towns. The company sees a stronger recovery in construction chemicals and DIY products however its Business to Business segment is seeing a slower recovery.

 

While performance of International subsidiaries has been impacted due to the pandemic more so in the SAARC region than the rest of the world, we have seen a recovery in June and July.

 

As a result of periodic restrictions, the company's plants are operating at a capacity utilization of 75% to 80% and operating efficiencies of warehouses have been impacted on and off. 

 

Commenting on the quarter performance, Bharat Puri, Managing Director, Pidilite Industries Ltd, "This quarter's performance was significantly impacted by the lockdowns as a result of the pandemic. While April sales was completely impacted, we saw a partial recovery in May and a significant recovery in June. The recovery has continued in July. The profitability of the business was helped by softer input costs as well as stringent cost control measures undertaken across the organisation. While near term demand appears uncertain as a result of the continuing pandemic and the resultant restrictions across several parts of the country, we remain focused on restoring volumes and ensuring profitable growth".