In line with market expectations, fast moving consumer goods (FMCG) player Marico registered a consolidated net profit increase of 21 per cent for the quarter-ending June 30, 2009 to touch Rs 56 crore as compared to Rs 46 crore in the corresponding quarter last financial year. The company would have recorded a 37 per cent increase in net profit during the quarter under review had there been no one time or exceptional items adjustment.
The maker of Parachute and Saffola's revenue for the first quarter increased by 17 per cent to touch Rs 697 crore as compared to Rs 597 crore in the corresponding quarter of the previous financial year. "Of the 17 per cent, 3 per cent was value growth while 14 per cent was volume growth," says Milind Sarwate, chief HR and strategy officer, Marico.
The exceptional items this quarter include a provision of Rs 4.8 crore on account of provision for 4 per cent excise duty charges that could be liable for the 200 milligram (mg) packs of coconut oil according to the latest regulation passed by the central excise board on June 3. Additionally, the company also debited a charge of Rs 4.1 crore for the sale of its stake in its US based subsidiary, Sundari in the previous quarter.
The quarter witnessed decline in the input commodity prices of Copra, by 19 per cent and safflower oil by 14 per cent lower than in the corresponding period of the previous year. These two raw materials account for over 50 per cent of its total input costs.
The lower input costs were passed on to the consumer as the company reduced the prices of its premium cooking oil Saffola by 10 per cent this quarter. The company also ran various promotional schemes giving 20 per cent extra on the 200 and 500 grams (gm) of Saffola and Parachute oils in the month of April. As such its advertising and promotional expenses for the quarter were higher at 12 per cent in Q1FY10 as compared to Q1FY09.
"These promotional offers have contributed to a higher growth rate in Q1FY10 over the corresponding quarter last year with Parachute registering 14 per cent and Saffola at 13 per cent volumes growth. In value terms however, the Saffola oils franchise grew by about 1 per cent over Q1FY09," says Sarwate who has a cautiously optimistic outlook for the rest of the year as he expects the high volume growth to even out.
The slowdown in the economy have affected the rate of growth in Kaya clinics turnover. The Kaya skin business made a loss of Rs 3.9 crore during Q1 FY10, primarily on account of the new clinics opened during the quarter (the company opened 13 clinics this quarter taking its count of clinics to 97,) which are yet to achieve break-even. The business achieved a turnover of Rs 44 crore, a growth of 26 per cent over the corresponding period in the previous year.
Marico’s international business, its key geographies being Bangladesh, MENA (Middle East and North Africa) and South Africa, comprised about 21 per cent of the group’s turnover during Q1FY10. As a whole, the international business turnover grew by 63 per cent over Q1FY09. The company also has applied for a Rs 9 crore IPO for its Bangladesh subsidiary.
