Analyst Meet / AGM - Analyst Meet
Market growth across urban and rural segments is seeing positive trend and looks very much sustainable
The company held its conference call on 12 Oct 18 and was addressed by Sanjiv Mehta CMD
Key Highlights
Underlying volume growth stood at 10% on YoY basis for Sep 18 quarter. Volume growth in Sep 17 quarter was at 4% YoY. Very strong rural demand which outpaced urban demand for the first time after many years.
Rural demand is growing by 1.2x that of urban demand. Still rural is not growing upto its potential and what has been seen in the past.
Higher volumes lead to economies of scale advantage and offset some higher material inflation.
There was no price led growth in Sep 18 quarter. Company will look into price increase as and when required.
The company has recently taken some price increases in home care segment by 2-3%.
Some savings on ad expenses in Sep 18 quarter. Lower veg oil prices and other costs also helped margins.
Homecare segment saw a volume growth of 13%, driven by fabric wash and household care products. Double digit volume growth across product categories. Purifiers portfolio was revamped in line with the needs of the consumers. The purifiers performance got impacted due to inventory adjustments and product profile changes. Expects Purifiers to do well from coming quarter onwards.
11% volume growth for beauty and personal care products. Premium product portfolio grew faster. The company received very good response for Fair & Lovely which was relaunched in Sep 18 quarter. Colour cosmetics and deodorants also performed well.
Oral care segment performance improved but was below expectation. Additional efforts in terms of brand building and promotions are under way for gaining more traction in this segment. . Close up is doing well compared to Pepsodent.
The foods & refreshments segment saw a 12% volume growth in Sep 18 quarter. Broad based growth across products. Ketchups and Jams saw strong double digit growth. Margins improved due to lower sugar and other raw material prices.
Ebidta margin improved by 160 bps on a comparable basis, which was driven by improved product mix, lower raw material costs and savings. Ad spends were higher due to increase in promotional activities and competition. The company has achieved cost savings through various initiatives taken in FY 18. All those initiatives are still going on and will aid margins.
Overall consumer demand is stable and moving up. Markets across urban and rural segment is seeing positive trend and looks very much sustainable.
While there is an increasing demand, there is also increase in ad spends and competitive activities to grab the increased demand.
Higher interest income leads to higher other income.
Overall very good June 18 and Sep 18 quarters. Demand momentum looks sustainable. Gradual increase in demand is visible across the business sub segments. Expects volume and margin growth to continue.
Crude is the major worry and any significant rise can affect the margins.
Expects to continue to focus on volumes and improving operating margins.
The company has not retained any benefits from GST. There were some issues by the government on small sachet packets on which the company has increased the gramage as absolute price decrease was not possible for a 1 Re or 2 Rs or 5 Rs packets. The company is confident of getting the things sorted out with the government on this issue.
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