Homegrown FMCG company, Emami Ltd is expecting a “less severe and manageable impact” of the regional lockdowns brought about by the second wave of Covid infections. While there could be “some slip” in the immediate short run, especially for summer brands, pent-up demand will lead to a rebound as “gradual unlocking happens”.

According to Harsha V Agarwal, Director, Emami Ltd is eyeing a “healthy double digit growth” for FY22 on the back of increased demand for Ayurveda-based health offerings and the pain-relief portfolio. On the other hand, discretionary spend categories – that include some value-added hair oils and the male-grooming ranges under ‘He’ and ‘Fair & Handsome’ brands - are expected to “witness rebound” post opening-up.

For FY21, seasonal offerings under Navratna range and male grooming portfolios saw an 8 per cent and 26 per cent decline, respectively. These along with the Kesh King portfolio – which saw a number of new launches in Jan-Mar period – did see a sequential growth until a string of Covid-induced regional lockdowns pulled-back recoveries.

“We do not see any long-term impact of the second wave of Covid infections. Regional lockdowns are there, but supply chains have not been hit this time. Operations across manufacturing units are on as usual. Whatever little impact we see, is at the distributor to retailer or kirana store-end because of time-bound operations of shops. But, this is the case across industries. Everyone is working on solutions like faster deliveries, using Whatsapp to place orders in advance, increasing credit period and so on. This has a negligible impact on our topline,” he told BusinessLine .

Delivery mechanisms have not been hit and rural sales – despite the impact of the pandemic being more pronounced in upcountry markets – continue to grow faster than urban. E-commerce – accounting for nearly 4 per cent of sales – continues to grow “three-fold”.

New launches, whether exclusively for online channels or general trade, in categories like Chawyanprash or Boroplus (soaps) have done well and gained demand in mom-and-pop stores. The company is also reworking its strategy to consolidate Emasol, its newly launched home hygiene range, and is focused on markets that are promising. New launches accounted for 4 per cent of the company’s overall topline in FY21.

Market sources say, offerings like immunity boosting kadhas, sanitisers and disinfection sprays saw slower than expected off-take over last year. Agarwal explains that immunity boosting is a small part of Emami’s overall portfolio with limited topline impact, while as a conscious decision, the company stayed away from categories like disinfectant sprays.

“Even as we speak many states are mulling or have announced relaxations in lockdowns. So sales will gradually inch back which make us optimistic of a double digit turnover growth for FY22,” he added.

Commodity price rise

According to Agarwal, the company will take necessary price hikes to offset rise in raw material costs. Packaging materials and crude derivatives are witnessing an increase, while rice bran oil is at an all time high. Mentha prices are relatively stable.

Gross margins did see some impact, but a 4 per cent increase was initiated in Q4FY21 – across offerings – to offset raw material price rise.

While advertising costs are expected to be on the lower side on a two year basis in Q1FY22 (Apr-June) because of lockdowns; other cost-cutting measures including strategic buying have been introduced.

“We do not see immediate pressure on margins; but even if there's an increase, the aim will be to see that volumes are not hit,” he added.

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