Marico is expected to post high single-digit volume growth in the India business in the July-September quarter.
Photograph: Courtesy, Marico
However, it is expected to moderate sequentially, the company said in its quarterly update on exchanges.
The domestic business of the company witnessed steady momentum through July-August, but it had to absorb the transitory impact of disruption in trade channels and purchases by the Canteen Stores Department, ahead of the implementation of the goods services taxes (GST) in September.
Parachute recorded low single digit decline in volumes amid unprecedented hyper inflationary input cost and pricing conditions, Marico said.
After normalising for millilitre reductions due to rise in prices, the brand saw flattish volumes during the quarter, “demonstrating formidable strength even after effective price hikes of more than 60 per cent on a year-on-year basis”, the company said.
“Consolidated revenue growth on a year-on-year basis will be touching the thirties on the back of pricing interventions and mix improvement, thereby closing the first half of the year on a strong note and staying well on course to achieve the full year aspiration,” it said.
Saffola Oils delivered flattish volumes, while value added hair oils delivered high teens growth.
Foods and premium personal care (including digital-first brands) maintained the accelerated scale up and kept up the pace of diversification, the update stated.
“The international business maintained its robust momentum with constant currency growth touching the twenties. Bangladesh and MENA businesses visibly outperformed, while other markets were steady in their course,” it added.
Marico maintains its aspirations of delivering sustainable and profitable volume-led growth over the medium term, driven by strengthening brand equity of its core franchises and scale up of new engines of growth, it said.
On input prices, the company said that it expects copra prices to remain range bound after correcting 10-12 per cent from its highs, while vegetable oil prices remained high and crude oil derivatives were benign.
“Gross margin is expected to come under incremental pressure, on a relatively high base and partly due to the pricing-led high denominator effect. We expect gross margin pressures to ease in the second half of the year,” Marico said.
Despite the input cost push, the firm said it sustained brand-building investments to reinforce the long-term equity of franchises and drive accelerated portfolio diversification.
“In addition, we also extended discounts on the pipeline inventory to our channel partners during the two weeks leading up to the effective date of the GST rate changes.”
Marico expects modest operating profit growth on a year-on-year basis, according to the update.
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