Mumbai: Godrej Consumer Products Ltd (GCPL), owner of brands such as Cinthol and Godrej FairGlow, saw its profit after tax go up by 17.7% to Rs38.6 crore in the first quarter (Q1) ended 30 June. Sales rose 20.59% to Rs287.6 crore, for the most part on account of price increases and the growth of the company’s soaps division. Sales from soaps, which account for more than half of the company’s revenue, grew by 28.6% to Rs162.8 crore.
GCPL, India’s second largest soap maker after Hindustan Unilever Ltd, has nearly 10% of the market share for soaps and has raised product prices by 5-8% in Q1. “The company managed to sell more premium soaps in the quarter, which boosted the value sales of soaps,” said Hoshedar K. Press, GCPL’s executive director and president. “Price increases were also a major factor in driving GCPL’s revenue,” he added.
The company’s hair colour business posted a 32.8% rise in sales and netted Rs63.75 crore, while toiletries business dipped by 6.5%, with revenue of Rs54.7 crore. The company also lowered its ad spending in the quarter to Rs21.06 crore— down 14.8% over the year-ago quarter. Staff costs rose 56.7% to Rs20.7 crore mainly because of increased personnel costs at GCPL’s Sikkim factory, which became operational in March.
GCPL shares closed at Rs140.15 on Tuesday, up 0.21%, on the Bombay Stock Exchange, on a day when the benchmark Sensex rose 1.9%.
Analysts note that margins have expanded only around 17 basis points in the quarter, mainly due to increase in the price of palm oil, a key ingredient used in making soaps. During Q1, GCPL introduced its first Keyline Brands Ltd product in India—Erasmic Shave Gel. In 2005, GCPL had acquired the UK-based FMCG (fast moving consumer goods) firm. It also made a foray into newer product categories such as shampoos and face wash.
GCPL officials said they are scouting for acquisitions, both in local as well as international markets. “We have identified few companies in developing countries in the Far East and Middle East regions,” said Press.
The company’s board also approved raising up to Rs400 crore, subject to the consent of shareholders.