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The Kolkata-based Rs 1,400-crore Hindusthan National Glass & Industries Ltd (HNG) expects its margins to improve in the January-March quarter of the current fiscal. However, no such significant improvement in margins is expected in the current quarter.
There will be a pressure on margins as the company might find it difficult to pass on the effect of the rise in input costs to its customers, Mr Mukul Somany, the Vice-Chairman and Managing Director of HNG, said.
The company's operating profit, as a percentage of net sales, dipped from 12 per cent during the quarter ended June to 9 per cent during the quarter ended September .
In an exclusive interview with Business Line on December 3, Mr Somany said, “When cost push inflation takes place, then there is a time lag after which you can pass on the cost to consumers. In the case of a business-to-business industry, things are very different, as you cannot simply keep changing the prices frequently.”
The margins might, therefore, remain subdued for the next one quarter (October-December) but will improve in the fourth quarter of this fiscal, he indicated.
“Our topline is expanding and so is the volume of the market. In a high inflation scenario, we will have to catch up with pricing commensurate to the cost push. We should be able to pass on the costs by this fiscal-end,” Mr Somany said.
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