• Sixty years is a good time to pause, look back and look ahead. In the last six decades, Fevicol has grown as a brand, touched lives in so many ways, and helped build bonds with our employees, dealers, distributors, carpenters, consumers and more
  • Tracing the journey of Fevicol gives us invaluable insights into how it became one of the most trusted and loved brands in India. These insights will continue to guide us as we travel further on this journey.
  • A single product, to now more than 10+ specific offerings, brand Fevicol has always been the champion adhesive.
  • Consolidated Net Sales grew by 16.6% On a comparable basis (after reflecting impact of GST from sale of base twelve months) consolidated Net Sales grew by 17.5% (excluding sales of Cyclo division of Pidilite USA Inc., which was sold by Pidilite USA Inc. in June 2017).
  • Branded Consumer & Bazaar Products Segment contributed 84.4% of the sales of the Company and grew by 15.6% Adhesives & Sealants category which includes adhesives (including joinery business), sealants and tapes. This category contributed 56.4% of the sales of the Company and grew by 17.3%.
  • To increase the brand engagement with millennials for Fevicol and to generate incremental business for Dr. Fixit, we made our digital initiatives deeper in FY 2018-19 through social media and performance marketing campaigns. With the objective of educating consumers about the new usages of Fevikwik and Art & Craft products, we increased the use of digital videos, in the form of pre-roll YouTube ads.
  • Fevicreate.com was launched to become a one-stop resource for all mothers and teachers searching for craft projects. The website includes projects across various academic subjects and is fully customisable by age of the child, level of difficulty and time at hand to complete the project.
  • Due to competitive pressure and market conditions, the Industrial Products segment volume grew only by 1.9%, as compared to 7.6% growth in the previous year.
  • During the year, ICA Pidilite has acquired brands and technical knowhow of certain wood finish products from the Company. Like for like sales growth after excluding these products is 26% over the last year. EBITDA was impacted by higher input cost and foreign exchange losses. Going forward, local manufacturing is expected to scale up and this should result in improvement in margins. CIPY was acquired in February 2018, hence its performance is not comparable with last year.
  • The prices of key raw materials which had increased significantly during the first half of the year under review started declining in the later part of the fiscal. Barring unforeseen circumstances this trend is likely to continue during the initial months of the current year. Continued slow down in construction industry and slow down in economic growth in recent months can impact sales growth for current year. Major subsidiaries in India are taking initiatives to improve margins and achieve consistent sales growth in their respective businesses.
  • The Company’s major international subsidiaries are in USA, Brazil, Thailand, Egypt, Dubai and Bangladesh. The Company is in the process of commissioning a second plant in Bangladesh during the year 2019. The US subsidiary plans to increase its focus on retail and e-commerce. Various initiatives are being taken to improve sales and margin in Brazil. The business environment in some of these countries remain subdued.
  • The Indian economy provides a large opportunity to the Company to market its differentiated products. Slower growth of the Indian economy and stress in sectors such as construction could impact the performance of the Company. Overseas subsidiaries by virtue of their relatively smaller size remain vulnerable to the political and economic uncertainties of their respective countries.

 

My view: This is one of the best annual reports I have read this season. Pidilite remains one of the pioneers in its sector and hence the stock commands a valuation that it does. It’s R&D efforts enable the company to keep making innovations to sustain the leadership. Whether the stock sustains the leadership remains to be seen!

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