Emami Q4 profit dips 52% on Kesh King brand
Emami's net profit, excluding those of its units, for the year-ago quarter stood at Rs132.34 crore
New Delhi: Packaged consumer goods firm Emami Ltd on Thursday reported a 51.7% drop in profit for the quarter ended 31 March to ₹ 63.80 crore as it amortized some of the intangible assets of the Kesh King brand.
Net profit, excluding those of its units, for the year-ago quarter stood at ₹ 132.34 crore.
The firm amortized intangibles, primarily trademarks and brands, worth ₹ 73 crore during the fourth quarter. Revenue for the three months to March increased 20.5% to ₹ 597.64 crore from ₹ 495.74 crore a year ago.
Emami acquired SBS Biotech Ltd’s Kesh King, a shampoo and hair oil brand, and allied brands for ₹ 1,684 crore in June. The firm also raised about ₹ 950 crore of debt to partially fund the acquisition.
For the year to 31 March 2016, Emami’s net profit dipped 30.5% from a year earlier to ₹ 327.67 crore as it amortized ₹ 210 crore. Revenue increased 17.8% year-on-year to ₹ 2,391.51 crore.
“The Ayurvedic and natural segment is also growing rapidly with increase in consumer awareness of the benefits that they offer. This is an encouraging trend for the industry and we plan to keep investing and focussing in the healthcare category with our brand Zandu to take advantage of this growth. We are augmenting our manufacturing capacity as well by investing around ₹ 300 crore in our new plant in Guwahati, which is expected to become operational by (fiscal year) 2017," said Emami director Harsha V. Agarwal.
In a statement, Emami said Kesh King has consolidated its position and increased market share by 3.7 percentage points to 35.4% of the Ayurvedic hair and scalp care market in the year ended 31 March.
Analysts, however, believe that sales of Kesh King were impacted by Patanjali Ayurved Ltd’s Kesh Kanti.
“Kesh King contributed 9% to the total revenues in Q4FY16—market share gained by 370 bps YoY to 35.4% in FY16. Implied sales of Kesh King seems ₹ 60 crore which is below expectations (guidance was ₹ 70-75 crore; did ₹ 68 crore in Q3FY16). This could possibly be due to the impact of Kesh Kanti of Patanjali Ayurved," Abneesh Roy, an analyst with Edelweiss Securities, said in a note.
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