GCPL consolidated net up 2% on higher tax, operating expenditure

Mumbai-based Godrej Consumer reported a sluggish 1.72% growth in consolidated net profit to Rs 132.71 crore for the quarter ended June 30, 2013 as a higher tax outgo hit bottomline.  Tax expenditure was up almost three times to Rs 33.82 crore for the June quarter versus Rs 11.23 crore last year.

On the net sales front, however, the company reported an almost 24% increase during the quarter to Rs 1,720.31 crore as the international and domestic businesses grew in double-digits. The latter, which contributes 53% to GCPL's overall revenues, grew 19%, while the international business grew 31%, Vivek Gambhir, MD, GCPL, said. "The company would normally undertake some contract manufacturing as well as in its FMCG business, which did not happen in the June quarter this year. So, on a like-to-like basis, the growth in the Indian business was actually 21% during the period," Gambhir said.

Growth in the Indian business was led by its three core categories of hair colour (32% sales growth), household insecticides (24%) and soaps (13%). But volume-led growth in soaps, one of its key and oldest businesses, was seven% only, with the balance 6% coming largely from price-led growth.

GCPL is the second-largest soaps maker in the country after Hindustan Unilever (HUL).  Its largest soap brand Godrej No. 1 retained its number third position in the pecking order of brands after Lifebuoy and Lux from HUL. This came at a time when the latter mounted an offensive in soaps & detergents during the June quarter to gain consumers on the back of lower input costs. It wasn't disappointed with sales in soaps & detergents growing 7.7% during the quarter under review.

Growth in the international business for GCPL was led by almost all geographies including UK (59%), Africa (58%) Latin America (31%) and Indonesia (21%), Gambhir said.

On the operating front, GCPL's total expenditure increased 26% as advertising & sales promotion (ASP), employee benefits and miscellaneous expenditure increased by 54 , 23 and 39% respectively during the quarter.

As a percentage of sales, GCPL's ASP spends stood at 13% in the June quarter, 200 basis points higher than the figure a year ago. Spends were high as the company aggressively pushed new products such as Aer air freshner and relaunched products such as Cinthol in the marketplace during the quarter.