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A slowdown in rural consumption notwithstanding, homegrown FMCG company Emami Ltd is looking at 8-10 per cent topline growth this fiscal.
Growth will come on the back of higher volume sales, a 2.5 per cent price hike across the portfolio and cost-cutting initiatives that include a reduction in logistics and packaging costs.
According to Mohan Goenka, Director, Emami Ltd, the company witnessed 6 per cent year-on-year topline growth in Q1 FY20, so 8-10 per cent growth is achievable.
Further, raw material costs are expected to go down towards the second half of FY20 and an improvement in rural consumption is also expected with a pick-up in the monsoon.
“Top-line growth is expected to be in the range of 8-10 per cent this fiscal. And even if there is a slowdown, it is expected to be a couple of points here and there,” he said on the sidelines of the company’s AGM here.
Compared to previous years, the company is “not taking an aggressive stand on pricing” this fiscal in view of the slowdown in consumption, he added. Over the last three or four years, the average price hike across its portfolio has been 4-5 per cent.
Online portfolio
Emami is also planning a separate portfolio across e-commerce and modern trade channels with a focus on healthcare and personal care segments. While existing personal care brands can be extended with adjacencies, in the health care segment, the company’s go-to brand will be Zandu.
Compared to some of the other home-grown or even MNC FMCG players, Emami still does not have a dedicated online only portfolio. Most of its offerings are omni-channel ones.
Thoughts are also on to introduce the German personal care brand Creme 21 in India, said Emami Director Harsha V Agarwal. Emami had acquired the brand in January. “By the end of this quarter (September) we will take a call on bringing Creme 21 to India. Online channels could help push the brand here,” he added.
Profit jump
Meanwhile, the company reported a consolidated net profit of ₹39 crore for Q1 FY20, a 47 per cent jump over the previous-year period. Consolidated revenues stood at ₹649 crore (₹614 crore).
According to a company statement, the June quarter witnessed challenges in terms of adverse economic conditions such as channel liquidity issues and muted rural incomes which, coupled with a high base in Q1 FY19, impacted growth levels in the domestic business.
During the quarter, gross margins at 64.2 per cent declined by 210 basis points due to an increase in raw material costs. The company’s EBITDA, however, improved.
According to Agarwal, the improvement came on the basis of cost reduction measures and a reduction in advertisement spends, too.
The Emami stock closed at ₹312.10 on the BSE on Thursday, up 1.38 per cent.
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