Marico Sees Steady Demand In March Quarter

Marico Ltd. said demand remained stable in the quarter ended March as growth in the rural market continued to outpace urban.

“We have also witnessed a healthy offtake growth on the back of the competitive strength of our franchises,” according to quarterly update of the maker of Parachute coconut hair oil and Saffola edible oil updated on the stock exchanges.

The company’s flagship product Parachute Rigids (hair oil) continued to meet expectations, it said. Volume of Marico’s coconut oil, which has 59 percent market share in India, grew 8 percent in the nine months ended December 2018, according to its exchange filing. Parachute coconut oil comprised 36 percent of the company’s turnover in financial year 2018.

Saffola edible oil, too, responded well to the focused marketing initiatives during the quarter, according to the quarterly update. Volumes of Saffola, branded as a safer alternative, have plateaued amid competition as Indians looked for healthier options. In an earnings call, Chief Executive Officer and Managing Director Saugata Gupta had said the company changed its branding strategy to draw customers.

Volumes of Saffola—the biggest contributor to the company’s revenue in the premium segment—rose 6 percent in the first nine months of the financial year ended March 2019.

Yet, the company said it would remain “cautiously optimistic” for Saffola in the near term.

Headwinds in Canteen Stores Department sales, according to the company, also seem to have passed.

Marico, in its annual report 2017-18, had attributed sluggishness in demand to lower sales from Canteen Stores Department—the single-largest client for many consumer goods makers. That came after the Ministry of Defence cut budget for India’s largest retailer.

The value added hair oils portfolio, however, witnessed a weak quarter, the company said. Volumes of the segment, which formed 26 percent of the company’s turnover in 2017-18, rose 9 percent in nine months ended December.

Overall, the volume growth of its domestic business was in line with the near-term outlook, the quarterly update said. To be sure, Marico’s overall domestic volumes growth, barring June 2018 quarter, remained subdued over the last one year, according to its filing.

Operating margin is also expected to improve moderately during the fourth quarter as pressure from input costs eased, Marico said in its quarterly update.

New Launches

• The company launched a new range of skin care products under the aegis of a new brand—Kaya Youth O2.
• It expanded its range of gourmet food offerings under Saffola Fittify Gourmet with the launch of a power breakfast range comprising ready-to-cook Poha and Upma.
• The company launched coconut-based organic food offerings under the Coco Soul brand—coconut sugar, coconut chips, coconut peanut butter and coconut almond butter.
• It introduced a new charcoal range of male grooming products under the Set Wet Studio X brand, which offers natural detox and enhanced cleansing properties.