Emami Limited
7,799words
86turns
0analyst exchanges
6executives
Management on call
Mohan Goenka
DIRECTOR, EMAMI LIMITED
Vivek Dhir
CEO, INTERNATIONAL BUSINESS, EMAMI LIMITED
Vinod Rao
PRESIDENT, SALES, EMAMI LIMITED
Gulraj Bhatia
PRESIDENT, HEALTHCARE DIVISION, EMAMI LIMITED
Rajesh Sharma
PRESIDENT, FINANCE AND IR, EMAMI LIMITED
Percy Panthaki
IIFL SECURITIES LIMITED
Key numbers — 40 extracted
37%
INR778 crore
18%
13%
42%
8%
45%
17%
10%
30%
25%
70%
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Guidance — 20 items
Mohan Goenka
opening
“It grew by 6% on a three year CAGR basis.”
Mohan Goenka
opening
“Pain management and healthcare range, despite corrections during the quarter, grew by 10% and 13% respectively on a three year CAGR basis.”
Mohan Goenka
opening
“Our rural penetration continued to progress steadily with project Khoj, in line with our plans.”
Mohan Goenka
opening
“Recent corrections in crude prices and the forecast of a normal monsoon are encouraging.”
Mohan Goenka
opening
“We are very excited to welcome the new members to our Board, who will bring much value to our organization with their rich experience and guidance.”
Mohan Goenka
opening
“In H2 we will be seeing the pressure easing, Abneesh.”
Mohan Goenka
opening
“When do we expect the brand to clock pre-COVID sales of around INR110 crore, INR115 crore?”
Mohan Goenka
opening
“Because if two of these power brands face this high base impact, it will be difficult for us to grow on a sustainable basis for the year.”
Prakash Kapadia
opening
“And lastly for Rajesh, what kind of amortization can we expect for Dermicool and Kesh King on a quarterly basis?”
Vivek Dhir
opening
“So all those pain points is behind and we can expect this kind of growth going forward?”
Risks & concerns — 15 flagged
Emami Limited July 29, 2022 With a high base of previous year and an unprecedented inflationary pressure that impacted the consumer spends across urban and rural markets, we posted a resilient profitable performance during the quarter.
— Mohan Goenka
My second and last question is on Q2 margins, other companies are saying Q2 margins could remain under pressure on the -- versus Q1 given rupee depreciation and lagged impact.
— Abneesh Roy
What would be the sense in your portfolio, do you see Q2 margins Y-o-Y pressure being lesser?
— Abneesh Roy
I understand seasonality bit, but if you could tell us on Y-o-Y basis, will the Q2 pressure be lower?
— Abneesh Roy
In H2 we will be seeing the pressure easing, Abneesh.
— Mohan Goenka
But Q2 still we are seeing the pressure would be there, because the stocks that we have bought, the raw material and everything is at a higher cost.
— Mohan Goenka
So, maybe Q2 would be a little pressure, but it would definitely ease in second half.
— Mohan Goenka
Because if two of these power brands face this high base impact, it will be difficult for us to grow on a sustainable basis for the year.
— Mohan Goenka
Prakash ji, it's not that way -- this quarter also you would have seen that despite of such a decline in these two categories, we have still managed to grow in other portfolios.
— Mohan Goenka
So there would be a challenge, as far as this is concerned, not that we are leaving it, we would still advertise, we are still going aggressive.
— Mohan Goenka
So rural, we are seeing those headwinds, which is the economic headwinds and the slowdown that -- we are surely seeing that.
— Vinod Rao
Of course in the generic business there was pressure on the immunity range, but the ethics business has done very well for us compared to the last year.
— Mohan Goenka
As far as OTC is concerned, basically we did, as I said, have a challenge on the immunity range even for OTC.
— Mohan Goenka
So, difficult to give an exact average tax percentage for me.
— Rajesh Sharma
So, if you just do the math t basis your three year CAGR and apply to maybe Q2 also, the decline on a Y-o-Y basis in Q2 would look much lower, maybe close to about 5%, 6% for the pain management business and maybe 15% odd for the healthcare business.
— Harit Kapoor
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Opening remarks
Percy Panthaki
Hi, good evening, everyone. Thank you for participating in this conference call for Emami's Q1 FY '23 results. I have with me from the company Mr. Mohan Goenka, Director; Mr. Vivek Dhir, CEO, International Business; Mr. Vinod Rao, President, Sales; and Mr. Gulraj Bhatia, President, Healthcare; and Mr. Rajesh Sharma, President, Finance and IR. I'll hand over the call for -- to Mr. Mohan Goenka for his initial comments. Over to you, sir.
Mohan Goenka
Thank you, Percy. Very good evening, friends. I welcome you all to this conference call on Emami's result for the first quarter of FY '23. As you all are aware, the environment continues to remain challenging, with the FMCG sector impacted by an unprecedented inflation, leading to subdued consumer sentiments and lower margins in this quarter. Despite the challenges, I'm happy that we have reported a resilient performance and profitable growth in Q1 FY '23. On a high base of 37% growth in the last quarter, our revenues at INR778 crore have grown by 18% in this quarter. Our domestic sales grew by 13% on a high base of 42%, with a volume growth of 8%, with our newly acquired brand Dermicool contributing around 8% to the domestic sales. International business grew strongly by 45% on a base of 17%. Our overall volume growth has been around 10% in this quarter. The quarter has been challenging for us where we have seen significant correction in two categories- Pain management by 30% and heal
Mohan Goenka
No, cooling hair oil doesn't apply, the two are very different products. So Navratna Cool Talc, in general, we are seeing an uptake -- upsales in talc, but not so much for Dermicool.
Abneesh Roy
Right. My second question is on Dermicool, what are the key changes you've already done? Are you happy with the first quarter performance of around INR63 crore sale? We haven't done any changes as of now, Abneesh, because we are just taking the product in our fold from 1st August, till now it was still with them. Post transition then whatever changes have to be done, we will do. Right. My second and last question is on Q2 margins, other companies are saying Q2 margins could remain under pressure on the -- versus Q1 given rupee depreciation and lagged impact. What would be the sense in your portfolio, do you see Q2 margins Y-o-Y pressure being lesser? I understand seasonality bit, but if you could tell us on Y-o-Y basis, will the Q2 pressure be lower? Emami Limited July 29, 2022
Mohan Goenka
In H2 we will be seeing the pressure easing, Abneesh. But Q2 still we are seeing the pressure would be there, because the stocks that we have bought, the raw material and everything is at a higher cost. So, maybe Q2 would be a little pressure, but it would definitely ease in second half.
Mohan Goenka
Yes, thanks for the opportunity. On Dermicool, given that it's so fairly summer season product. When do we expect the brand to clock pre-COVID sales of around INR110 crore, INR115 crore? In the PPT you mentioned some initiatives, or it's too early? Once it comes under your fold in August and then we'll have some more game plan and clarity? The Dermicool arrangement, I don't know if you know about it, it's been a distribution agreement with Reckitt. So their system continues to sell it this quarter, and the brand actually tapers off, so this become zero -- close to zero sales in August. So what we will really see is the true benefit coming out when we start loading, which is the JFM and April, May, June quarter, that's when we'll start realizing the true potential of that brand. And on the pain management and Zandu Healthcare, obviously, the high base was there last year. Because I think last year, especially North had seen lot of traction on the balm portfolio. We had seen lot of new c
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