In Q3FY21, Marico Limited’s India business has announced that revenue from operations grew by 16 percent YoY to Rs 2,122 crore (US$ 287 million) on the back of strong domestic volume growth of 15 percent and a constant currency growth of 8 percent in the international business. Amidst steadily improving consumer confidence and the receding impact of the pandemic, the India business witnessed robust demand trends across more than 95 percent of its portfolio.
During the quarter, as key raw materials saw inflationary trends, the company increased effective consumer pricing in select portfolios, while continuing to absorb the cost hit to a certain extent. Meticulously driven cost-saving initiatives and rationalized advertising in discretionary categories enabled an EBITDA margin delivery of 19.5 percent. Overall, EBITDA and PAT grew by 11 percent and 13 percent, respectively, on a year-on-year basis.
General Trade led the growth with rural growth outpacing urban markets. Among the alternate channels, e-commerce delivered augmented growth, while modern trade fared better sequentially, delivering flattish growth year-on-year. CSD witnessed a modest decline year-on-year, though recovering sequentially.
As consumption patterns normalize, the company will strive to sustain the current momentum and clock a double-digit volume growth in the India business in the coming few quarters, provided there is no second surge of COVID-19 cases and economic recovery continues. Over the medium term, the Company shall endeavor to deliver an 8-10 percent volume growth, growing the core franchises and scaling up the foods business. With a focus on gaining and defending market share, the company expects to maintain a threshold operating margin of 19 percent plus over the medium term.
Marico’s India Business recorded a turnover of Rs 1,627 crore, up 18 percent on a year-on-year basis, on the back of strong underlying volume growth of 15 percent. The operating margin was lower year-on-year at 21.6 percent in Q3FY21 vs 23.2 percent in Q3FY20, owing to the residual impact of inflationary raw material cost. The company increased effective consumer pricing in select portfolios to counter the input cost-push to a certain extent, in addition to rationalizing advertising spends in non-core portfolios and driving a host of cost-saving initiatives.
Post a successful integration within Marico’s fold, the Beardo franchise has recovered well post the COVID-induced headwinds and is now tracking ahead of internal aspirations.
Marico’s International business clocked a constant currency growth of 8 percent in Q3FY21. The operating margin in the international business expanded to 21.3 percent in Q3FY21 vs 20.5 percent in Q3FY20, given tighter overhead cost management across all geographies.
Saugata Gupta, MD & CEO, said, “The company had a stellar quarter with very healthy growth in both the India and International businesses. With the core franchises exhibiting strength and new bets in Foods also trending well, we expect the domestic business to deliver much ahead of medium-term aspirations over the next few quarters. The International business is also poised to maintain steady growth over the next few quarters. Despite a challenging input cost backdrop, the company pulled in a resilient margin performance on the back of focused spending and aggressive cost control. Over the medium term, the Company aims to grow the core and build sizeable new franchises through premiumisation, foods and digital brands.”
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