- Revenue growth is flat vis-à-vis the last financial year.
- In terms of volume sales, there was a drop of 3.2% during this financial year
- EBITDA for the year is 270 crores which is a decline of 3% over the EBITDA of the last financial year.
- The EBITDA margin remains a very healthy 34.2%
- PBT and PAT are 280 crores and 220 crores after adjusting the exceptional item of 18.38 crores
- For Q4 17, volumes have declined at 6.9% whereas the turnover has declined by 1.9%
- Environment continues to remain subdued with overall Hair Oil market growth at just 1.6% in value terms for FY 17
- Volume growth of the Light Hair Oil was slightly better at 4%
- Hair Oil industry volume growth has picked up marginally vis-à-vis the third quarter but not substantially
- Revival in Hair Oil growth are more in the urban markets compared to urban markets
- Strain on the primary sales volume is mainly due to destocking that continues in the wholesale segments as well as the rural markets
- 47% of the sales comes from wholesale
- Increased focus on improving efficiency of the sales force to improve direct reach
- Currently, they have around between 6 lakhs - 6.5 lakhs direct outlets. Have the aim to reach around 7-7.5 lakhs outlet directly
- Modern trade growth was 24% in Q4. Cash purchases have started after the adverse impact of demonetization.
- Gross margins not expected to increase this year.
- Secondary sales growth in Q4 was around 3%-3.5%.
- Inventory level at the distributor end currently is 30 days. It has gone down in Q4 after moving up in Q3
- Minimum of 1/3rd of Pat to be given as dividend. If Cash is not utilized, they can give more
- In Bajaj Almond Drops, around 50% of sales is still in glass Bottles. Other 50% in PET bottles
- Aim to increase their focus on the rural market.
- Market share in Feb 2017 has touched an all-time high of 61.3% in value terms
- Intent to reach a market share of about 65% by 2018
- Plan to increase market share in States in which they have less than 50% market share like West Bengal
- Relative Market share this year is 4.6 which is highest till now
- Market share for the year is 30 bps less due to emergence of smaller player
- The rural sector should see a reversal if the monsoon as good this year
Raw Material Prices
- LLP remained at Rs. 46.22 per kg versus Rs. 46.37 per kg which was there in the third quarter of this financial year.
- Spot prices of LLP have gone up to Rs. 64 a kg, they are still using the LLP which we stored at Rs. 46 a kg
- New communication strategy to be used on the back of extensive clinical trials done on the brand.
- The focus in the test market is on using chemist panel for distributing Nomarks Cream and using an integrated marketing campaign to improve consumer awareness and preference for the brand
- Will be extending this strategy both in terms of communication and distribution in more states
- On back of this and our improved reach in international markets, we should see a reversal of sales trends on Nomarks in the first half of this financial year
- //;;;;The urban states you will see more focus on Nomarks
- FAL (Fair and Lovely) has grown the market significantly in the last two months because of increase in the grocery part of the business
- FAL is not chemist driven product. It is a process or general merchant driven product
- Would get into 4 more states, by May-June of this year
Value-added Perfumed Hair Oil
- They expect this category to grow rapidly as this category has been growing at 5% for the past few years while the volumes for regular coconut oil has decreased by 7%.
- Within this category, they have high hopes from Amla lite, VACNO, Ayurvedic and Cooling sub-categories
- Impact of demonetization has majorly waned down in q4
- Secondary sales showed a growth of 3-3.5% which is 5% higher compared to Q3
- Cash purchases have also started picking up after the adverse impact of demonetization
- However, Demonetization derailed their project on launching new products in first quarter of FY 18.
- GST will help in providing tax benefits for their Guwahati factory
- Expected to have major impact on the wholesale market
- Still un-clarity on whether they would come under 18% bracket or 28% bracket
- Sales Force Automation programme- Saathi
- The company has more than 1000 odd sales people in the market
- Certain percentage of these sales people may be operating sub optimally as difficult to keep track of everyone
- Now, each officer has 5-6 people under him and he can actually find out where there is a slack in sales calls
- Grown by 56% this quarter in value term
- Added 4 new markets. Among the big markets that we have added is Russia and Egypt. Among the smaller markets we have added markets in Africa like Kenya and Ethiopia
- Currently around 5.7% of total turnover, It was under 4% in Q4 16
Key Focus Areas for Future
- Increase Market share gains from other hair oil segments
- Focus on rural penetration
- Leverage existing strengths to introduce new products
- Pursue inorganic opportunities