Business Today

Glued To Growth

Over the past five years, Pidilite has grown at a compounded annual growth rate of 18 per cent despite the tough market conditions.
twitter-logoManu Kaushik | Print Edition: Oct 12, 2014
Sandeep Batra, Director (Finance), Pidilite Industries.
Sandeep Batra, Director (Finance), Pidilite Industries. Photo: Rachit Goswami

BT-Yes Bank Best CFOs Survey

Best Transformation Agent (Large Companies)

Winner: Sandeep Batra, Director (Finance), Pidilite Industries

Sandeep Batra thinks long term, whether it is about business decisions or his personal life. The director of finance at the Rs 4,283-crore Pidilite Industries, Batra studied in one school throughout his childhood. He spent 21 years in his first job at ICI India.

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Around five years ago, when Pidilite promoters were putting together a team of professionals to run the company, it took a lot of convincing to bring Batra on board.

"I am not the person who shifts easily. I figured that the promoters were clear in their objectives. Above all, it is a sticky company," says Batra, adding that prior to his joining, the company was largely run by the Parekh family. "The transformation we are witnessing now is a result of the efforts to professionalize the management some years ago," he says.

Over the past five years, Pidilite has grown at a compounded annual growth rate of 18 per cent despite the tough market conditions. It makes adhesives and sealants, construction chemicals and polymer emulsions that are used across a wide range of sectors such as construction, automotive, electronics and packaging.

Many of these sectors had a tough time due to economic slowdown and low end-consumer demand. Fevicol, for instance, is used in making furniture. More furniture is being built when homes are refurbishing or new homes are constructed. Both are linked to the well being of the economy.

"Because the economy was significantly challenged, we also felt some slump in growth. But our performance has been relatively better than other consumer-centric companies due to various reasons," says Batra.

Ruchir Khare, analyst at Kotak Securities, says: "Growth in the furniture market is linked to GDP growth. The spurt in economic growth will remain the key growth driver for Pidilite. However, we expect some moderation in growth going forward."

Pidilite's strengths, according to Batra, lies in product innovation, strong brand recall, distribution network and connect with the end consumers.

While Fevicol and M-seal remain its marquee brands, Pidilite has launched several new products and variants of its existing brands since 2006. A substantial part (80 per cent) of its revenues comes from consumers segment. In 2012/13 alone, it launched six products.

The company is spending close to five per cent of revenues on advertising and research and development. Batra agrees that four per cent spending on advertising is low compared to other consumers companies. "Our products have a strong brand recall," he says. Also, advertising campaigns is one part of creating consumer awareness, the company is focussed on below-the-line activities to increase direct contact with end customers - carpenters.


Analysts say that the next level of growth for Pidilite will come from smaller cities and new product categories. A January report released by Nomura Financial Advisory and Securities says that "Pidilite has a network of more than 2,000 distributors servicing more than 400,000 dealers and 4,000 industrial customers. Its distribution network is well entrenched in rural India and tier-3, 4, 5 cities, where we believe there is considerable scope for growth owing to rising income levels."

In recent years, the company has ventured into art materials and stationary segment which are growing extremely fast. "It is a small category for us at the moment but we are creating a new market that will grow bigger with time," says Batra. Interestingly, the investments in new products and global expansion - the company is present in over 70 countries-are funded through internal cash and the company is virtually debt-free.

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