Hindustan Unilever and Godrej Consumer Products which declared their March 2014 quarter results have managed good sales growth.

But the results suggest that the companies have wielded their clout and grown well only in segments where they are market leaders, leaving the others in the segment with slower growth.

Being a leader helps For instance, soaps and detergents, which form half of HUL’s sales, grew 9.6 per cent for the March 2014 quarter compared to the year ago, improving on the 7 per cent growth in the December 2013 quarter.

With HUL dominating the soaps segment with brands such as Lux, Lifebuoy and Breeze, it was able to pass on product price hikes and keep growth up. Double-digit growth in market leader Surf and successful re-launch of mass brand Wheel also helped.

But the company lost out in the oral care segment in its Pepsodent brand even as market leader Colgate has steadily eked out gains and new entrants crowded into the market.

Godrej Consumer, which is second to HUL in the soaps market, saw a meagre 1 per cent growth in value terms with a 4 per cent volume drop in the soaps segment for the March 2014 quarter.

But household insecticides and hair colour, which are both niche segments and where the company leads the market, have done well. Household insecticides grew 17 per cent in the recent March quarter, recovering from a temporary slowing in the December quarter. Hair colours too, clocked a strong 16 per cent growth.

Profit margins steady Consolidated sales (including overseas operations) for Godrej Consumer were up 12 per cent for the recent quarter over the year-ago period. Input costs as a proportion of sales were up two percentage points to 48 per cent.

But the company cut down on adspend, shrinking it by 15 per cent in the March 2014 quarter over the year before.

As a result, operating profit margin stood higher at 17.7 per cent against the 16.3 per cent in the March 2013 quarter.

For HUL too, the adspend-to-sales ratio dropped a whisker to 12.1 per cent against the 13 per cent in the March 2013 quarter.

But with staff and other expenses eating up a higher share of sales, operating profit margin stayed flat at 13.4 per cent.

Domestic FMCG sales for HUL grew 9 per cent in the March 2014 quarter, backed by a 3 per cent volume growth, a level it has maintained for four quarters now.

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