Company expects price cut in FY10, which is likely to squeeze volumes.
With global recession hitting hard the consumers in urban areas, Wipro Consumer Care and Lighting, the Rs 2,083 crore non-IT business of Wipro with focus on consumer care, lighting and furniture, is going for a rural push. Even though there had been a change in the buying habit of the elite urban consumers, rural India seems to have remained unaffected from the downturn making the company to exploit for opportunities in that market segment.
Said Vineet Agrawal, president, Wipro Consumer Care and Lighting, “For the Santoor brand, our thrust had been on rural India as we don’t see much impact of the current global financial crisis there. While we are number three now in the overall rural India, we have become leader in the rural south India with a 21 per cent market share. We did not have too much focus on north and east India.”
Wipro’s Santoor brand had been growing 29 per cent for the last three years, on year-on-year basis. However, during the same time, the Chandrika brand grew 18 per cent as the ayurvedic soap category was not growing well, the company said.
For the quarter ended March 31, 2009, Wipro’s Consumer Care and Lighting business recorded a revenue of Rs 516.4 crore and profit before interest and tax (PBIT) of Rs 68.3 crore with a YoY growth of 7 per cent and 8 per cent respectively. For the full fiscal year 2008-09, revenues stood at Rs 2083 crore, up 37 per cent, and PBIT at Rs 190 crore, an increase of 34 per cent.
Going forward, the company expects the volume growth to come down as the prices of FMCG goods are expected to come down. Agrawal said there was a possibility of a price reduction for the FMCG products.
“We expect the volume growth to come down for the fist time as the price is expected to drop this year. This is something we had not seen earlier,” he added.
Wipro’s furniture and commercial lighting business was under pressure in the fourth quarter of FY09 despite showing a growth of 23 per cent for the whole year. The lighting business which is dependant on the IT/ITeS sector, particularly saw some pressure as most of the expansions pertaining to this sector are on hold now.
The company, however, has shown some solid growth in the green lighting segment by undertaking 21 of the 32 green building projects completed in the country so far.
For FY10, Wipro does not intend to invest much in capacity expansion as some of the capex earmarked for the previous fiscal is yet to be utilised fully. The company expects the capex for FY10 to be about Rs 50 crore, majority of which will be used for expanding the capacity of its toilet soap factory in Haridwar.
