FMCG margins to stay under pressure this year: Adi Godrej

Nachiket Kelkar
Moneycontrol.com

Margins at Godrej Consumer Products are likely to stay under pressure this fiscal as raw material prices have remained high year-on-year, Chairman Adi Godrej told moneycontrol.com on Friday. He also said the FMCG major will have to continue to raise product prices due to the high input costs and the recent sharp depreciation in the rupee. Most FMCG companies have faced pressures from a surge in cost of key raw materials like palm oil over the past one year, prompting them to raise price several times. The recent depreciation in rupee has only added to these pressures, as import of raw materials and for some companies, import of products from operations overseas, has become expensive, making further price hikes imminent. Last fiscal [2010-11] Godrej Consumer's EBITDA margin declined to 17% from 20% in 2009-10 as raw material costs doubled. In the second quarter too its raw material costs were up 31% year-on-year. "Clearly there is a strong impact from cost increases