Emami expects 8-10% growth in FY24, driven by investments in start-ups and macro support

Homegrown FMCG company Emami Ltd, which had seen its domestic business grow by around five per cent in the fourth quarter of FY-23, is expecting the growth momentum to improve to 8-10 per cent in 2023-24 driven by a mix of macroeconomic support and internal interventions including its investments in new age start-ups such as The Man Company and Brillare.

The company is also looking at close to 150 basis point expansion in gross margins in FY-24. Its gross margins expanded by around 60 basis points in the fourth quarter of FY-23 and stood at 63.1 per cent.

According to Mohan Goenka, Vice Chairman, Emami Ltd, though the summer has been a little weak, the company has witnessed some momentum from the rural markets.

• Read: ‘Government spending to have a positive effect on rural consumption’ 

“If the trend continues, we are very hopeful that it should be about 8-10 per cent growth for the domestic business. What is very, very heartening is that the input cost pressure has really eased and we are seeing margin expansion. So we would be able to put in some money on advertising on most of our categories,” Goenka said in the earnings call transcript uploaded on BSE.

The industry is experiencing a mixed-demand environment, and discretionary categories like personal care remain muted as consumers, especially in rural areas, are reducing nonessential expenditures. Inflation in rural areas reached 6.8 per cent in FY-23, the highest level in the previous nine years. Rural inflation surpassed urban inflation for the first time since FY-18. Additionally, excessive rainfall in many areas of the country in March impacted the demand for summer products, he said.

“With inflation moderating, the upcoming quarters look promising for the industry due to declining commodity prices, better monsoon, higher crop realization and continued government interventions,” he added.

Innovation in product portfolio

The company’s constant effort to innovate its product portfolio with a clear focus on digital first launches, and its sustained initiatives to ramp up the distribution network has augured well for the company. The company would continue to develop new products, particularly in the D2C space.

Emami launched around 20 products in FY23, the majority being digital first launches on the D2C portal Zandu Care. The recent launches contributed more than three per cent to its domestic sales in FY-23 and around 7 per cent to modern trade, and 20 per cent to e-commerce sales. The company has seen continued growth in modern trade and e-commerce for the several past quarters, and the trend continued in Q4, where modern trade grew by 18 per cent and e-commerce grew by 64 per cent, increasing their saliency to more than 20 per cent of domestic sales, a 500 basis point jump over the previous year.

The company continued its investments in Project Khoj, a rural expansion program and added close to 11,000 towns last year reaching around 52,000 towns and villages at the end of the last financial year. It plans to add another 8,000 towns and reach around 60,000 towns and villages by the end of FY-24.

COMMENT NOW