FMCG Major Marico Increased Ad Spends in Q2FY18

Advertising and Sales Promotion spends to sales ratio during the quarter was 10.4%.

by exchange4media Staff
Published - Oct 30, 2017 6:02 PM Updated: Oct 30, 2017 6:02 PM
FMCG major Marico reported in that the company has increased its advertising spends during the quarter that ended on September 30, 2017. The firm reported a net profit for September quarter at Rs 185.04 crore.

It stepped up Advertising & Sales Promotion spends as compared to the past few quarters to support buoyancy in volumes, the company noted. With this increase in spends the company has moved closer to the medium term guidance levels of 11-12% ad spends to sales ratio. “The company intends to continue spending on ASP in the near term for ensuring long-term sustainable growth,” the company noted in a press release.

Advertising and Sales Promotion spends to sales ratio during the quarter was 10.4%. The ad spends for this quarter were influenced by the recently implemented Goods and Services Tax regime. “Unlike in the previous taxation regime, the GST system allows the credit of taxes paid at each stage as a set-off against the taxes to be paid at every subsequent stage. In light of the same, the ASP of the base quarter (Q2FY17) is 11.8% on a comparable basis,” the company noted.

The India business achieved a turnover of Rs 1,200 crore (USD 187 million), a growth of 12% over the same period last year. The volume growth in India was 8% for the quarter. The company attributed this growth competitive pricing, restocking in trade, subsequent to the pipeline reduction prior to implementation of GST, and strategic investments made by the firm.

The company’s revenue was higher by around 7% at Rs 1,536.3 crore against Rs 1.439.5 year on year.

The operating margin during Q2FY18 was 19.3% (before corporate allocations) as against 21 % for the same period last year.

The company also declared dividend at Rs.1.75 per equity share of Re. 1 each, being 175% on the paid-up equity share capital of Rs. 129.07 crore. The payment date for the said interim dividend shall be November 29, 2017.
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