Marico reduces ad spends by 25 pc in Q4 FY11 to Rs 671.93 mn

Marico reduces ad spends by 25 pc in Q4 FY11 to Rs 671.93 mn

Author | Dipali Banka | Wednesday, May 04,2011 9:00 AM

Marico reduces ad spends by 25 pc in Q4 FY11 to Rs 671.93 mn

Marico Ltd has reported a 25 per cent decrease in its advertising and sales promotion spends for the quarter ended March 31, 2011 on a consolidated basis. The company spent Rs 671.93 million (9 per cent of net sales) in Q4 FY11, while it had spent Rs 892.39 million in the corresponding quarter last year. This includes ad spends of Marico India, Marico International and Kaya Skin Clinic. On a standalone basis, too, Marico has reported a 20 per cent dip in ad spends to Rs 413.34 million in Q4 FY11 from Rs 520.2 million a year ago.

Marico’s total ad spends for the year ended March 2011 on a consolidated basis stood at Rs 3.46 billion, as against Rs 3.51 billion in fiscal year 2010.

Like many other FMCG companies, Marico’s operating margins continue to be under pressure due to rising input costs, especially in copra. The company judiciously played with price hikes at regular intervals, which helped it reduce pressure on its margins. “With firming of input prices from the second half of FY11, the company took price increases in a phased manner in H2FY11 in select SKUs,” a company statement said. According to the quarterly results update from Alchemy Share & Stock Brokers Pvt Ltd, the company implemented an average 32 per cent price hike in its Parachute portfolio and another 14 per cent in Saffola to reduce margin pressure due to the increase in input costs. The last price hike in Parachute was implemented in January/ February.

Marico’s Q4 FY11 net sales grew 24.1 per cent YoY to Rs 7.47 billion, driven by price-led growth of 19 per cent, while volumes contributed 5 per cent. International business grew 21 per cent YoY, while Kaya posted 41 per cent growth in revenues to Rs 640 million, while profits were at Rs 25 million during the quarter.

Saugata Gupta, CEO - Consumer Products, Marico Ltd, commented, “FY11, despite the challenge of all round inflation, has been satisfying with significant franchise expansion across all our key brands and laying strong foundations for an array of new product initiatives expected to blossom over the next couple of years.” During Q4FY11, Marico also divested its refined edible oil brand Sweekar to Cargill India Pvt Ltd.

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