Dabur looks to maintain volume growth of 12% in FY13

Dabur India reported a net profit of Rs 149 crore against Rs 128 crore (YoY) in the first quarter of FY13. Its net sales also increased to Rs 1,462 crore from Rs 1,213 crore in the corresponding quarter last fiscal.

S Raghunathan, CFO, Dabur India said the benefits of price increase and somewhat subdued inflation has resulted in the good performance of the company in the present quarter. The company has managed a volume growth of 12% and is looking forward to maintaining it in FY13, the CFO told CNBC-TV18.
However, concerns over a weak monsoon remains and according to Raghunathan, the course of the rains would decide whether they would be able to maintain their growth targets or not. Below is the edited transcript of the interview on CNBC-TV18. Q: Take us through the margin expansion and across category margin performance that you have witnessed in the quarter?
A: The margin performance has been good in the quarter. On the back of somewhat subdued inflation, the inflation has been lower compared to the previous year same time, and the benefit of pricing increases which took place in the last 9 months was reflected in the performance. Our gross contribution in terms of calls ratios to sales has improved by around 2 percentage point which is 200 basis points.
We have put this money back into the advertisement spends, stepped up our brand investments. Overall, EBITDA margins for the company have been kept at a flattish level.
_PAGEBREAK_ Q: What kind of volume growth have you managed to do this quarter, what is your targeted volume growth for FY13 and do you think there is a slippage that you might see in rural demand because of the economy and that may actually hinder your volume growth in the next couple of quarters?
A: Our volume growth in the current quarter is around 12% and price growth remains 4%. Secondly, looking forward, we expect the volumes to be around this level but it depends on the monsoon factor which we are watching closely. That is the key in terms of our future volume projections.
While I will not be able to quote at this time what is likely for FY13 but, hopefully if things continue the way it is, it should be around this level. But the caveat is how the monsoon really plays out.
 
Thirdly, on the rural growth front, we are getting a mixed signal. Some of our categories like hair oil and shampoo seemed to have slowed down a bit in the rural areas. However, categories like glucose have somewhat gone up. We have to watch this equation little more closely as the monsoon goes on. Q: Any categories where you have started slipping, any signs of sluggishness in volumes at all in the July quarter?
A: Not across the categories. Yes, in toothpaste category we have seen a bit of slip in volume but, there is more in the discount side and not on the higher value side. That is one category where we have seen a bit of a slowdown in volumes. Q: Are there any more price hikes that the management is going to take in order to combat raw material cost or is this 5% it?
A: We have to watch it closely. Inflation is somewhat benign but, it depends again on the monsoon story, how it evolves, why it has a baring on the overall inflation basket for us, how the crude price behaves and also how the rupee behaves.
We have to closely monitor all that but, in the next 2-3 months we do not see any significant price increase. Rather there will be marginal adjustments. We are always open to increase in prices if there is structural inflation.