MAM
Inflation bites FMCG consumption, demand remains low
Mumbai: The major players in the FMCG sector, Marico and Godrej Consumer Products Ltd, hint that inflation continued to ‘hit hard’ FMCG industry and demand remained soft in the June quarter.
According to Marico, current trends indicate that consumers “titrated consumption” in some non-essential categories and either “downtraded among brands or switched to smaller packs” in the essential categories.
In its quarterly update for Q1 FY23 Marico said, “In the given context, India business volumes declined in mid-single digits. The performance was particularly dragged by a sharp drop in Saffola Oils. Excluding Saffola Oils, the India business posted marginal volume growth. Parachute Coconut Oil recorded a minor volume decline.”
Marico said it maintains its aspiration of “delivering sustainable and profitable volume-led growth over the medium term”.
According to Godrej Consumer Products Ltd (GCPL), the country’s FMCG industry continued to be “hit hard by inflation levels” leading to successive price hikes as well as impacting volumes during the three months ended June.
A recent update revealed that in the first quarter of the current fiscal, the leading FMCG player said that the rural markets witnessed slower growth compared to urban markets during the period.
GCPL expects to deliver early double-digit sales growth on a high base in India and the growth will be mostly “price-driven”. The company would have “mid-single-digit volumes drop on a high base, with a three-year volume compound annual growth rate (CAGR) close to mid-single digits,” in the domestic market.
“The Indian FMCG industry continued to remain soft during the quarter. It continued to be hit hard by inflation levels aggravating due to geopolitical tensions, leading to successive price increases and impacting volumes,” GCPL said.
Inflation impacts markets worldwide
In recent months, inflation has been on the rise in most markets worldwide.
Among the international markets, GCPL said that Indonesia, which is the company’s second-largest market after India, also faced an impact on consumption and margins.
“In Indonesia, with hygiene performance waning after COVID-19 and a large hygiene comparator in base, we expect a high single-digit sales decline. The sales performance excluding hygiene was largely flat,” it said.
GCPL said that it is putting building blocks in place to drive category development and general trade distribution to ensure gradual recovery in the medium term.
“In Godrej Africa, USA, and the Middle East, we continued our growth momentum across most of our key countries of operations. We expect to deliver double-digit sales growth, with a continued focus on driving sustainable, profitable sales growth,” it said.
Further, it expects constant currency sales growth in the high teens in Latin America business.
“At a consolidated level, we continue to leverage our category and geographic portfolio. We expect to deliver high single-digit sales growth and a three-year CAGR in double-digits,” the company said.
With respect to profitability in the June quarter, GCPL expects lower year-on-year EBITDA (Earnings Before Interest Tax Depreciation and Amortisation) margins.
“This is due to input inflation, upfront marketing investments to drive category development and weak performance in Indonesia,” GCPL said.
On the other hand, Marico’s international business maintained “strong momentum, delivering high-teen constant currency growth.” It experienced growth in all markets and managed to remain on the path of sustained profitable growth.
The company expects “consolidated revenue in the quarter ended marginally higher on a year-on-year basis.”
Dabur’s international business is expected to register a “high single-digit revenue growth” during the April-June quarter in constant currency.
“Overall, the consolidated revenue is expected to grow in the mid to high single digits. We continue to grow ahead of category growths and gain market share in most of our segments,” Dabur said.
Mixed performance in the domestic market
In the domestic market, GCPL witnessed a mixed performance in its personal care and home care categories.
“Personal care sustained its strong double-digit growth trajectory with a two-year CAGR also in double-digits, led by both personal wash and hair colours. Home care witnessed a low single-digit sales drop on a high base. However, the two-year CAGR remained at a high single-digit figure,” it said.
Brands
Kotak Mahindra Bank appoints Ramesh Iyer to board
Veteran financier replaces Ashok Gulati, who retires in March
MUMBAI: Kotak Mahindra Bank has announced a change to its board of directors, with independent director Ashok Gulati set to retire at the end of his term on 5 March.
The company said it has appointed Ramesh Ganesh Iyer as an additional and independent director for a four-year term, effective 17 February, subject to shareholder approval.
Iyer brings more than four decades of experience in financial services. He spent much of his career at Mahindra & Mahindra Financial Services, where he served as vice chairman and managing director before taking on the role of president for the financial services sector and member of the group executive board at Mahindra & Mahindra. He retired from the group in April 2024.
During his tenure, Iyer was instrumental in expanding rural and inclusive finance initiatives, scaling the company’s assets and customer base. He also led the creation of subsidiaries in rural housing finance, insurance broking and asset management, and oversaw international joint ventures.
Iyer holds a commerce degree and a doctorate of letters, and currently serves on the boards of several listed and unlisted companies.
The board meeting approving the changes was held in Mumbai on February 17 between 6.30 pm and 6.50 pm.
