FMCG major Marico Industries today said the recent political turmoil in Egypt has affected production at its two plants in the North African country by up to 70% and will impact revenue for at least one quarter.
The company also cautioned that if the unrest that is spreading to other countries in the region reaches Saudi Arabia, it could spell bigger problem for the FMCG firm.
"We have two factories in Egypt and you know the situation in Egypt is still not absolutely back to normal. In the last one month, virtually almost 60-70% of our production got impacted because we were closed for 10-15 days," Marico Chairman and Manging Director Harsh C Mariwala told reporters here.
The company had to shut the plants for a week in the beginning of February when the unrest swept the country. It sells only haircare brands there.
"The share of this business totally would be about 5-7% of the total company. So it is not that large and maybe we will be impacted for one quarter," Mariwala said.
He said the Middle East and North Africa region contributes about Rs 200 crore to the company's revenues and the unrest, which has spread to other countries like Libya, Bahrain and Yemen, could hurt it.
Mariwala, however, added that it will be bigger countries like Saudi Arabia, which will determine the market outcome.
"Unrest is spreading to some other region, like Bahrain and other countries. The impact of that will be limited as long as it doesn't not go into big countries like Saudi Arabia," he said.
Mariwala, who has taken over as the president of industry chamber Ficci, said the Egypt unrest that toppled the long-reigning leader Hosni Mubarak, would have a bigger impact on his company than other firms.
"We are also using Egypt as the supply chain hub to the region. So our impact would be a little bit more than others who are using Egypt only for their Egypt operations," he said.
"People don't go out often. So there is issue of demand and supply chain because of this. Our Egypt factory also feed our Middle East operations. So that got impacted because of closure of Egypt factory," he added.
In 2006, Marico had acquired Egyptian hair care brand Fiancee.
Regarding price rise, Mariwala said inflationary pressure has affected commodities like edible oil.
"The cost has gone up almost 70-80% and so we have taken three price increases in recent months...We have to wait and watch what happens further to the commodity price and to some extent it will get covered by our price rise," he said.
However, according to the CMD, prices have moderated recently by about 5%.
He also added the company finds the international market more lucrative for acquisitions.
Marico had last month strengthened its presence in the male grooming segment by acquiring 85% stake in the Vietnamese company International Consumer Products Corporation (ICP).
"We are a growth oriented company and we believe that acquisitions is a way to grow in our related areas where we want to grow and in certain geographies. There are far more number of opportunities in the international arena than in the Indian space. Our aim is to strengthen presence in South Asia, South East Asia and Africa," he said.
Asked if the example of Egypt will deter it from acquiring companies abroad, he said: "We have to factor in various things. One can not predict."
