Piramal Glass on capex drive to meet demand

Saturday, 7 May 2011 00:00 - - {{hitsCtrl.values.hits}}

(REUTERS) - Piramal Glass plans to set up new furnaces and upgrade existing ones over the next two years to support growing demand in its high-margin cosmetics and perfumery bottles segment, its chairman said.

The 1.6-billion-rupee expansion, spread across its facilities in India and the U.S., would complement the glass maker’s ongoing 1-billion-rupee capacity addition in Gujarat, Ajay Piramal told Reuters in an interview.

“The right product-mix with a focus on high-margin cosmetics and perfumery segment has improved margins for us. We are also planning to bring in more efficiency in production through upgradation,” Piramal, who also controls Piramal Healthcare and Piramal Life Sciences, said.

“We have some of the top international perfume brands as our clients and the worldwide demand for this particular segment is growing significantly.”

Earlier in the day, the company said March quarter consolidated net profit soared 194 percent to 360 million rupees on net sales of 3.29 billion rupees.

The glass moulder’s EBITDA margins rose 630 basis points to 28 percent for the quarter, it said in a statement.

Piramal Glass, which runs fully-owned units in the U.S., Sri Lanka and France, and has operations in 54 countries, counts Hindustan Unilever, L’Oreal and LVMH among its clients.

“As the demand surges, we have to upgrade our capacities... We plan to set up new furnaces in India while investments are being made to upgrade equipment in the U.S. unit,” he said adding the company saw about 52 percent of sales this fiscal coming from the cosmetics and perfumery segment.

The Piramal group firm commands almost half of the global nail polish bottles business, besides having a 35 percent share in the Indian medicine bottles market, he said.

“Since this business requires immense skills and experience, we cannot grow via acquisitions in India as similar players don’t exist,” Piramal said, but refused to comment on any overseas acquisition plans.

The company, which draws about 75 percent of sales from international clients, expects to maintain this in the years to come.

“This trend would be more or less the same even if more and more production of international brands is slowly moving to India,” he said.