India business to report very strong double-digit volume growth for Marico in Q4

New Delhi: Maker of Parachute oil Marico Ltd., on Monday said sales of fast-moving consumer goods registered improving demand trends as economic growth during the fourth quarter moved to positive territory with India business posting very "strong double-digit" volume growth but maintained caution with the ongoing surge in covid-19 cases in the country.

The company's India business delivered a very strong double-digit volume growth, albeit on a low but relatively stronger base when compared to key peers in the sector, the company said in an update on the March quarter earnings Monday. In the same quarter, last year, India had moved to a strict lockdown to prevent the spread of covid-19 thereby impacting volumes of fast-moving consumer goods.

A year later, demand trends have improved, the maker of Saffola Edible Oils and Livon hair serums said. A surge in covid cases and subsequent curbs, however, can derail any meaningful recovery.

“In the last quarter of the fiscal year, the sector continued to exhibit improving demand trends as quarterly economic growth has moved into positive territory and the covid-19 vaccination rollout has gathered pace. However, as we keep a watchful eye on the evolving situation post the current COVID surge, the company is adequately prepared to tackle any disruptions in the business environment on account of the same,” it said in an update on its March quarter earnings Monday. Marico is yet to announce earnings for the quarter.

Sales via general trade put up a strong show led by rural growth, the company said. “E-Commerce continued to gain salience. Modern trade was affected by the high base on account of the pre-lockdown pantry loading in March last year but has been in recovery mode. CSD rebounded to post healthy growth," Marico said in its update.

The quarter also saw significant input cost pressures faced by makers of fast-moving consumer goods makers. Companies took to selective price hikes to tide over higher costs.

Revenue growth in the fourth quarter, said the company, was even higher than volume growth due to pricing actions taken across key portfolios to partially alleviate the significant input cost pressures during the period.

It expects cost pressures to rectify in the second quarter of this year. “As operating margin is likely to dip significantly owing to the severe input cost pressure, the company expects to deliver low double-digit bottom-line growth in the quarter. While the input cost environment has turned challenging in the short term, the company expects these trends to be transient and correct from Q2 next year,” it said.

Across categories the company said demand trend was improving, barring premium personal care.

“Parachute Coconut oil led from the front, posting stellar volume growth. Saffola Edible Oils grew in double digits for the sixth quarter in a row, despite a very high base. Value added hair oils firmly moved along a sustainably recovering trajectory with high double-digit volume growth in the quarter. The foods portfolio more than doubled in size with a strong performance in the oats franchise and aggressive innovations through this year. While select franchises of premium personal care continued to trend positively, the overall portfolio was still muted,” the company said.

Meanwhile, the company's international business posted strong double-digit constant currency growth on the back of recovery across markets.