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Hawkins ad spend flat in Q1-2015

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BENGALURU:  Indian pressure cooker manufacturer Hawkins Cookers Limited (Hawkins) spent Rs 3.37 core (34.1 per cent of Advertising and Sales Promotion or ASP) towards Advertising (Ad spend) in Q1-2015, 2.7 per cent lower than the Rs 3.46 crore (19.7 per cent of ASP) in Q4-2014 and 1.2 per cent more than the Rs 3.33 crore (39.4 per cent of ASP) in Q1-2014. Overall, ad spend was almost flat across the three quarters ? Q1-2015, Q4-2014 and Q1-2014.

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

The company?s ASP comprises ad spend and discounts. As per Fig 1 below, based on historical data over the nine quarter period starting Q1-2013 until Q1-2015 (current quarter), the company spends the maximum towards ads in Q3, the festive season in the country. In Q2 and Q4, it resorts more towards discounting.

The company has been skewed more towards offering discounts as compared to advertising. Over the nine quarter period under consideration, the simple average ad spend in terms of percentage of ASP is 26.7 per cent, while the proportion of discount over the same period works out to 73.3 per cent of ASP.  This trend is likely to continue based on historical data across the nine quarters under consideration. The company in Q2-2015 is likely to resort significantly on offering discount and spend a lower towards advertising. Q3-2015 is likely to see the company?s ad spend go up significantly.

The company?s highest ad spend over the nine quarters has been Rs 8.67 crore in Q3-2014 (49.3 per cent of ASP). Hawkins ad spend has been lowest in terms of rupees in Q4-2013 at Rs 0.35 crore (2.9 per cent of ASP), while the lowest in terms of percentage of ASP was in Q2-2013 at 2.8 per cent (Rs 0.37 crore).

The company?s ASP in Q1-2015 at Rs 9.88 crore (10.2 per cent of Total Income from Operations or TIO) was 43.7 per cent lower than the Rs 17.55 crore (12.4 per cent of TIO) in Q4-2014 and 17 per cent more than the Rs 8.44 crore (11.2 per cent of TIO) in Q1-2014. ASP in terms of simple average in absolute rupees across the nine quarters under consideration is about Rs 13.01 crore.

Hawkins TIO in Q1-2015 at Rs 97.20 crore was 31.5 per cent less than the Rs 141.87 crore in Q4-2014 and 29.1 per cent more than the Rs 75.31 crore in Q1-2014.

While the company?s TIO across the nine quarters under consideration shows a linear upward trend, the company?s ASP seems to have flattened out linearly in terms of absolute rupees, and shows a slightly downward trend in terms of percentage of TIO. Please refer to Fig 1A below.

Hawkins PAT for Q1-2015 at Rs 7.07 crore (7.3 per cent of TIO) was 46.1 per cent lower than the Rs 13.13 crore (9.3 per cent of TIO) in the immediate trailing quarter and 44.6 per cent more than the Rs 4.89 crore (6.5 per cent of TIO) in the corresponding year ago quarter. Please refer to Fig 2 below.

Overall, on a linear basis, PAT seems to be moving upward both in terms of absolute rupees as well as percentage of TIO.

Click here to read the financial result

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