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Gillette India ups Ad exp 40 per cent in FY-2014

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BENGALURU: Gillette India Limited (Gillette) reported a 40.2 per cent higher advertisement and sales promotion (ASP) spend for its year ended 30 June 2014 (FY-2014) at Rs 419.40 crore (24 per cent of net Total Income from Operations or TIO) as compared to the Rs 299.16 crore (20.8 per cent of TIO) in the year ended 30 June 2013 (FY-2013).

ASP in the quarter ended 30 June 2014 (Q4-2014) was 10.7 per cent lower at Rs 110.56 crore (23 per cent of TIO) versus Rs 123.84 crore (27.2 per cent of TIO) in the immediate trailing quarter (Q3-2014) and was 39.8 per cent more than the Rs 79.06 crore(20.1 per cent of TIO) in the year ago quarter Q4-2013.

Note: (1) 100,00,000 = 100 lakh = 10 million = 1 crore.

(2) Gillette financial year closes of 30 June, hence, the quarter ended30  June is Q1, while the quarter ended 30  September is Q2; quarter ended31  December is Q2 and quarter ended 31 March is Q3.

Across 10 quarters starting Q3-2012 (quarter ended 31 March 2014) until Q4-2014 (quarter ended 30 June 2014), the company ASP shows an upward linear trend both in terms of absolute value as well as percentage of TIO.

The company’s TIO has also been moving steadily upwards. In FY-2014, TIO at Rs 1749.49 crore was 21.7 per cent more than the Rs 1437.72 crore in FY-2013. TIO in Q4-2014 at Rs 479.72 crore was 5.3 per cent more q-o-q and 22.1 per cent more y-o-y.

Please refer to Fig 1 below.

Gillette’s ASP is made up of two components – advertisement and trade incentives. Please refer to figure 1A below for the breakup and the ratio. As is evident, the company’s ad spend ratio has gone to 1.41 and 1.42 times as compared to trade incentives in FY-2012 and FY-2013 respectively. In both FY-2010 and FY-2011 ratio of advertisement to Trade Incentives was 1.2.

Gillette PAT has been steadily going down. In FY-2014, Gillette reported PAT of Rs 51.42 crore (2.9 per cent of TIO) as compared to the Rs 87.16 crore in FY-2013, though  in Q4-2014, the company’s PAT at Rs 16.76 crore (3.5 per cent of TIO) was almost double (1.98 times) the PAT of Rs 8.48 crore (1.9 per cent if TIO) in Q3-2014 and was 1.8 per cent more than the Rs 16.47 crore (4.2 per cent of TIO) in Q4-2013. PAT has been showing a downward linear trend across five years starting FY-2010 to FY-2014 and across the 10 quarters under consideration, both in terms of absolute value as well as in terms of percentage of TIO. Please refer to Fig 2 below.

Three segments contribute to the company’s Income from operations (TIO) – grooming, portable power and oral care. Grooming segment includes blades, razors and toiletries, portable power includes batteries and oral care includes toothbrushes, toothpaste and oral care products. Gillette India’s products are sold under the brand Gillette with sub-brands like Fusion and Mach 3. Gillette India caters to Men’s personal care products such as razors, blades, shaving creams, gels, men’s skincare products, among others in India.

The company says that sale of the grooming segment was up 19 per cent in FY-2014 versus FY-2013, oral care saw a growth of 31 per cent in FY-2014 as compared to last year and portable power saw a growth of 21 per cent in the current year as compared to previous year.

Click here to read the unaudited financial statement

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