Marico Results Analysis for Q2FY08

The Rs.7 crore forex loss and a huge employee outgo affected the bottomline of the company. The margins would have dropped down further had it not been for the reduction in lower advertising, sales and promotion costs. On the topline front, Marico, or better recognized as the `Parachute’ company reported a growth of 30% during the second quarter of

FY09 at Rs. 603 crore. Of this 30% growth, organic volume growth comprised 11% and inorganic growth of 3% accompanied by price led growth of 16%.

PAT during the quarter was Rs 47.1 crore, a growth of 11.6% over Q2FY08 in line with volume growth and this was after absorbing a forex MTM loss of Rs.7 crore. Had it not been for the MTM loss, the PAT growth for the quarter would have been 24% over Q2FY08. During the quarter, Parachute continued to maintain its leadership in India with a 48% market share. The Saffola refined edible oils franchise grew by 9% in volume over Q2FY08 and this was partly on account of the introduction of a new variant, Saffola Active.

International Business now forms 17% of Marico’s revenue and it is building a strong base in South & South Asia,

MENA and South Africa. On the Kaya Clinic front, at the end of Q2FY09, it had 77 clinics, up from 65 in March 2008. Of these 67 clinics are operational across 20 cities in India while there are 10 clinics situated in the Middle East.

Though Marico’s revenue has been healthy during the first half of the year, a drop in the rate of growth in the immediate future can be expected. Its increased spending on advertising, sales and promotion planned in the coming months is expected to exert pressure on the bottomlines. The company is also sure to feel the effects if the slowdown, especially at its Kaya clinics.
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