Emami expects a hit in summer sales as rural demand slides

FMCG player Emami, which houses brands such as BoroPlus, Zandu Balm, and Navratna Oil, is expecting a hit on its summer product portfolio due to the second wave of the pandemic. This might impact the first-quarter sales of the company, which reported over three-fold jump in net profit to Rs 88 crore for the fourth quarter ended March on Tuesday.

“The second wave was unexpected and given that we have a more seasonal portfolio, we expect to see a higher dip than our peers,” Mohan Goenka, Director, Emami, told Moneycontrol.

According to Goenka, the slide in rural demand due to the second wave of the COVID-19 pandemic is likely to impact the company’s summer portfolio, which includes products like Navratna Oil and Kesh King Hair Oil. Emami draws more than half of its overall sales from rural India, while its products such as Navratna Oil garner about 40 percent of their sales in the first quarter (April-June) itself. And hence, the company expects the effect of the pandemic on its product range to be more pronounced than its counterparts.

Its men’s grooming brand range Fair and Handsome, too, is expected to witness a further slide in demand.

“However, we want to wait and see how June pans out,” said Goenka.

Emami plans to offset this loss by ramping up the sales of its healthcare range and pain management portfolio which includes Zandu Balm.

The FMCG company reported its results for the fourth quarter ended March (Q4) on Tuesday. It registered a 285 percent year-on-year (YoY) growth in consolidated net profits in Q4 to Rs 87.73 crore as compared to Rs 22.75 crore in the corresponding period last year. Its revenue from operations climbed over 37 percent to Rs 730.76 crore in Q4 as opposed to Rs 532.68 in the fourth quarter last year.

The quarter witnessed strong growth all around, with 44 percent growth in domestic business and 28 percent jump in international business, the company informed in a regulatory filing. The company’s initiative to boost e-commerce as a channel has paid off and it has grown by three times in the last year. Going ahead, the company plans to launch a slew of products exclusively for its e-commerce portal.