Marico (BSE: 531642, NSE: “MARICO”) is one of India’s leading consumer products companies, in the global beauty and wellness space. During 2019-20, Marico recorded a turnover of about INR 73.1 billion (USD 1.03 billion) through its products sold in India and chosen markets in Asia and Africa.
Marico touches the lives of 1 out of every 3 Indians, through its portfolio of brands such as Parachute, Parachute Advansed, Saffola, Saffola FITTIFY Gourmet, Coco Soul, Hair & Care, Nihar Naturals, Livon, Set Wet, Set Wet Studio X, Veggie Clean, Kaya Youth O2, Travel Protect, House Protect, Mediker, Revive and Beardo. The international consumer products portfolio contributes to about 23% of the Group’s revenue, with brands like Parachute, Parachute Advansed, Mediker SafeLife, HairCode, Fiancée, Caivil, Hercules, Black Chic, Code 10, Ingwe, X-Men, Sedure, Thuan Phat and Isoplus.
In Q1FY21, Revenue from Operations was at INR 1,925 crores (USD 257 million), down 11% YoY. The domestic business was severely impacted in April due to supply-chain disruptions following the extension of the national lockdown but was able to scale up sequentially in May and June as restrictions were relatively eased. The domestic business clocked sales at 104% of the annual average monthly run rate of FY20. However, given the very significant revenue skew in Q1FY20, which was circa 31% (unrelated to portfolio seasonality), the underlying volume decline was at 14% on a year-on-year basis.
Secondary volume growth was in line with the reported primary volume growth as the Company continued to operate at lower distributor inventory levels after the drop at the end of Q4FY20, in order to protect channel partner ROIs in the current environment.
The Company gained market share in more than 90% of the portfolio on MAT basis, with accentuated gains during Q1.
With social distancing becoming increasingly prevalent, consumers favored neighborhood GT stores as well as E-Commerce platforms over Modern Trade during the quarter. The CSD business during the quarter was nearly reduced to its half, which had a meaningful impact on the overall volume growth of India business.
While the international business de-grew by 4% in constant currency terms, Bangladesh continued to hold the fort by delivering a commendable 10% constant currency growth, while other geographies recorded double-digit drops.
EBITDA was up 1%, led by 300 bps expansion in operating margins which was attributable to softer input costs, rationalization of A&P spends in discretionary portfolios and very aggressive cost control. PAT was at INR 331 cr., up 3% YoY on a like-to-like basis.
A&P spends stood at 7.1% of sales, given the rationalization of spends in a subdued demand environment with supply constraints. After minimal spends in April, the Company continued to invest for growth in the core portfolios in light of improving traction during the rest of the quarter. Similarly, Trade spends during the quarter were also rationalized accordingly.