Expect rural demand to boost volume growth ahead: Emami

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Expect rural demand to boost volume growth ahead: Emami

Emami is now directly catering to the rural business by expanding its team in those areas. The company expects rural demand to support volume growth ahead, NH Bhansali, chief executive officer, Emami Group told CNBC-TV18.

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Excerpts from Markets Midday on CNBC-TV18 Watch the full show » ALSO READ See latest News about Emami See previous management interviews See what other Experts & Brokerages are saying about Emami

FMCG player Emami is confident of maintaining atleast 25% margins going forward .

The company reported consolidated net profit of Rs 94.5 crore in Q3FY12 against Rs 85.5 crore posted a year ago. Its consolidated net sales stood at Rs 457.3 crore as compared to Rs 403.8 crore, year-on-year.

Emami is now directly catering to the rural business by expanding its team in those areas. The company expects rural demand to support volume growth ahead, NH Bhansali, chief executive officer, Emami Group told CNBC-TV18.

"Earlier our direct reach to the rural business was around 16%, which has now increased to 22%, so that way direct reach growth is around 50%. This kind of initiatives will further help to boost our sales ahead,"he added.

Below is the edited transcript of Bhansali's interview with CNBC-TV18. Also watch the accompanying video.

Q: Can you take us through the highlights of your results? It has been a good performance as far as sells and margins are concerned. Is this something you will be able to maintain in terms of a 25% margins?

A: Yes very much. We are into the FMCG business and our brands are pulling the businesses. We are confident that these are the kinds of margins that we will maintain.

Q: Do you see any easing of raw material pressure at all?

A: It is not easing, but it has more or less stabilised. The menthol price is hovering around Rs 1,600-1,700, since three or four months. I don't think that it would now go up from this price. The prices for other raw materials also are stabilized if not easing.

Q: We believe much of this was also on account of the big increase in rural sales that we have seen it's already accounting for about 50% of your turnover. How much are you hoping to scale this up by going forward?

A: If you look at our plate it is always 50-50% rural versus urban. But we have done very strategic shift; we are now directly catering to the rural business by expanding our team into the rural area. Earlier our direct reach to the rural business was around 16%, which has now increased to 22%, so that way direct reach growth is around 50%. This kind of initiatives will further help to boost our sales ahead.

Q: Do you notice any improvement in rural prosperity. There are contradictory views of people saying that the rural demand which was very good in 2011 towards the end is petering out. Any nuances that you can tell in terms of demand from rural areas?

A: There could be momentary hurdles there, but fundamentally rural is doing very good. Maybe for one month or two months there could be an up and down, but overall growth is coming from the rural in a sizeable way and net business is strong.

Q: Coming to the exports front while Middle East is seeing good amount of traction, Africa not so much, what is really happening over there and what kind of an outline do you have for Q4 and perhaps FY13?

A: You are right. For the quarter also we have seen growth not coming up in from the politically disturbed countries of North Africa like Algeria, Morocco, Albia, and Tunisia in Egypt. There have also been foreign currency issues with countries like Kenya. So these have overall impacted, but going forward in the next quarter and in the further quarters this would stabilize.