FMCG firm Emami Ltd bets on demands in rural markets to grow in FY24

FMCG major Emami Ltd is looking to grow in the current financial year riding on the improving demands in the rural markets, a senior company official said on Friday.

Speaking to PTI, Emami's CEO of Finance, Strategy and Business Development NH Bhansali said the company will focus on expanding its core business with brand extensions, and also look for acquisition opportunities.

"There have been numerous challenges and volatile times for the sector, but now we are witnessing a gradual easing of inflationary pressure and a resurgence in GDP growth. Consequently, we anticipate favourable conditions ahead, especially for the FMCG sector," he said.

"While the urban market has shown consistent growth, we are also seeing promising signs of recovery in rural demand after enduring significant difficulties. Therefore, we expect a progressive improvement in rural demand in the foreseeable future. Furthermore, a normal monsoon will provide the necessary impetus for the overall business," he added.

Rural markets account for about 50 per cent of Emami's sales.

Bhansali said the company's margins improved by 200 basis points in the March quarter of FY'23, and are expected to further improve with the cost pressure easing.

On Thursday, the Kolkata-headquartered company reported a 60 per cent drop in its consolidated net profit to Rs 142 crore for the quarter that ended March 2023.

Bhansali attributed it to an extraordinary MAT (Minimum Alternate Tax) credit of Rs 230 crore recorded in the quarter, which otherwise registered a profit of Rs 354 crore.

He said that in the current fiscal it expects the EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) to rise to pre-COVID levels of 27 per cent, from the current 25 per cent.

Bhansali said the FMCG major will continue to look for acquisition opportunities, and focus on the startup area.

Dermicool was the last major acquisition the company made from Reckitt Benckiser for Rs 432 crore, last year. It has also forayed into pet care and nutraceuticals.

Emami will also focus on expanding the penetration of its power brands by increasing its distribution network by 10 per cent, the official said, adding that it is also looking to retain export growth of 19-20 per cent.

Bhansali said the company was not planning any manufacturing capacity expansion, but the capital expenditure will be around Rs 80-100 crore in the current fiscal.