Haircare adds gloss to Godrej business; profit rises 3.7%

Fast moving consumer goods major Godrej Consumer Products Ltd, or GCPL, which owns brands such as Cinthol and Godrej FairGlow, saw its net profit rise slightly by 3.7% in the quarter ended 31 March, compared with the same quarter last year.

The increase was marginal because in the March 2007 quarter, GCPL had reported a one-time gain of Rs8.7 crore. Excluding the one-time gain, the company’s net profit rose 32.5% to Rs40.8 crore from Rs30.9 crore in the same quarter last year.

The firm’s net sales rose 12.4% to Rs271.8 crore due to price increases and the growth in its haircare and soap segments.

GCPL, India’s second largest soap maker after Hindustan Unilever Ltd, has nearly 9.2% of the market share in the segment. The company increased prices by about 5% in the March quarter. Sales from soaps, that account for over 45% of its revenue, grew by 6.9% to Rs126 crore.

“The company’s haircare business, which is a high-margin segment, did well to drive the profits. We also managed vegetable oil purchase efficiency and cost control, which helped in managing prices despite high input cost hike,” said Adi Godrej, chairman of the Godrej group.

The company’s hair colour business posted a 30.3% rise in sales and netted Rs69.7 crore, while the toiletries business rose marginally by 1.9%, with revenue of Rs62.3 crore. During the quarter, the firm acquired a South African hair brand, Kinky, for Rs140 crore.

Advertising and promotion spends went up by 20.7% to Rs26.1 crore as the company relaunched its flagship brand Cinthol and powdered hair dye Godrej Expert Hair Dye in the quarter. Staff costs rose 43.2% to Rs18.3 crore mainly on more hires, increments and higher bonus, the firm said.

GCPL said it is scouting for acquisitions, both in local and international markets. “We continue to look for acquisitions and our aim is to have about 30% compounded annual growth rate. Inorganic growth will play an important part to achieve that goal,” said Godrej.

GCPL shares closed at Rs125.95 on Monday, down 0.94%, on the Bombay Stock Exchange, on a day when its benchmark Sensex fell 0.64%.