Covid-19 Outbreak: Marico Expects Domestic Volumes To Decline In Q4

Marico Ltd. expects “low single-digit” decline in its domestic volumes for the quarter ended March as business was disrupted on the back of the novel coronavirus outbreak and a subsequent national lockdown.

The maker of Parachute coconut oil, however, said in an exchange filing that its edible oil and foods business—which contributes nearly a fifth of its revenue—remained strong during the three-month period. That, the company said, was its “only bright spot”.

The segment that comprises brands like Saffola grew in January and February, and witnessed a sharper pick-up in March as households stocked up on essentials ahead of the three-day national lockdown starting March 24.

Its hair oil and value-added hair oil segments, however, saw weakness as consumer focus shifted towards essential items. The company said its traditional distribution channels, including small retailers, stockists and wholesalers, have been reeling under liquidity constraints, while modern trade channels like supermarkets and e-commerce have done well.

The company said its distribution network has been significantly impacted due to lack of manpower under the lockdown, while it focused on movement of essential food and grocery items to consumers. It said that it produces essential food and grocery products at a reduced scale, “while deploying highest safety standards”. Production at the company’s certain other manufacturing units remains suspended and is awaiting approvals from government authorities, the filing said.

Marico’s revenue grew 2 percent over the previous year to Rs 5,819 crore in the nine months through December 2019 at a time when its operating margin improved by 240 basis points to 20.4 percent. Its domestic volumes grew by at 2 percent during the same period.