Q3-2015: Gillette India y-o-y marketing spends down 5.8%

BENGALURU: Gillette India Limited reported a 5.8 per cent drop in advertisement and sales promotion (ASP) spends in Q3-2015 (quarter ended 31 March, 2015, current quarter) to Rs 116.71 crore (23.6 per cent of Total Income from Operations or TIO) as compared to the Rs 123.84 crore (27.2 per cent of TIO) in the corresponding year ago quarter (Q3-2014), but was 1.3 per cent more than the Rs 115.25 crore (23.1 per cent of TIO) in the immediate trailing quarter (Q2-2015).

During the nine month period ended 31 March, 2015 (9M-2015), Gillette ASP at Rs 323.46 crore (22.6 per cent of TIO) was 4.7 per cent more than the Rs 308.84 crore (24.3 per cent of TIO) in 9M-2014.

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

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

Three businesses contribute to the company?s 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 TIO in Q3-2015 at Rs 494.14 crore was 8.5 per cent more than the Rs 455.50 crore in Q3-2015, but was 0.9 per cent lower than the Rs 498.47 crore in Q2-2015. Across 13 quarters starting Q3-2012 (quarter ended 31 March, 2014) until Q3-2015 (quarter ended 31 March, 2015), the company?s TIO shows a linear increasing trend as represented by the broken blue line. In 9M-2015, Gillette?s TIO at Rs 1432.59 crore was 12.8 per cent more than the Rs 1270.07 crore in 9M-2014.

During the 13 quarter period under consideration in this report, Gillette?s ASP shows an upward linear trend both in terms of absolute value as well as percentage of TIO as is indicated by the broken green trend line and the broken maroon trend line respectively. The highest ASP in absolute rupees and in terms of percentage of TIO spent by the company in these 13 quarters was in Q3-2014 (quarter ended June 30, 2014), at Rs 123.84 crore and 27.2 per cent of TIO while the lowest in both parameters was in Q3-2013 at Rs 66.61 crore and 18.7 per cent of TIO respectively.

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 across five years starting FY-2010 until FY-2014. As is evident, the company?s ad spend ratio has increased to 1.558 times, 1.424 and 1.412 times as compared to trade incentives in FY-2014, FY-2013 and FY-2014 respectively. In FY-2010 and FY-2011 ratio of advertisement to Trade Incentives was 1.199 and 1.2013 respectively. Based on the past trends, it is likely that the ratio in FY-2015 will be skewed towards ad spends, and consequently during the three completed quarters and the balance single quarter of the current Financial Year as well.

Gillette PAT had been steadily going down until Q1-2015 both in terms of absolute rupees and in terms of percentage of TIO. Also, 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 (6.1 per cent of TIO) in FY-2013. However, during the 13 quarter period under consideration, a reversal happened in Q2-2015. Further, the company?s 9M-2015 PAT at Rs 85.30 crore (six per cent of TIO) was more than double (2.47 times) the PAT of Rs 34.56 crore (2.7 per cent of TIO) in 9M-2014. This 9M-2015 PAT is already more than the PAT reported by the company for FY-2012, FY-2013 and FY-2014, and is almost at par with PAT in FY-2011.The company is a profitable company, and should earn profit after taxes in the remaining quarter ? Q4-2015. Hence, it should report much better, if not record numbers for FY-2015.

As mentioned above, post Q2-2015, at least in terms of absolute rupees, Gillette PAT shows a linear increasing trend, as is evident from the broken orange trend line. In Q3-2015, the company?s PAT at Rs 30.76 crore more than tripled (3.63 times) the PAT of Rs 8.68 crore in Q3-2014, but was 16.5 per cent lower than the Rs 36.86 crore in Q2-2015. In terms of percentage of TIO, the broken brown trend line indicates a downward linear trend, which may yet change.

In its earnings release for Q3-2015, Gillette India says that grooming business sales were up nine percent, portable power business sales were up four per cent and oral care business sales were up six per cent as compared to the corresponding year ago quarter.

Latest Reads
The Currency of Experience Has Global Value

Research from YouGov on behalf of Priority Pass™, the world’s leading and original airport experiences program, has found that the trend for experiences over material goods is global.

MAM Marketing MAM
WATConsult becomes the 'Highest Awarded Indian Agency' at Epica Awards with 2 Golds and 1 Silver Metal

WATConsult, the digital and social media agency from Dentsu Aegis Network led the Indian tally at Epica Awards by winning 3 out of the 9 awards won by Indian agencies in total. WATConsult’s #PowerlessQueen bagged 2 Golds and 1 Silver metal, making it the best performing and highest awarded Indian...

MAM Media and Advertising Media Agencies
Sabbas Joseph to address BeaWorld - international festival of events in Portugal

Sabbas Joseph, Co- Founder & Director, Wizcraft International Entertainment Pvt Ltd, will be addressing the BeaWorld Festival of Events and Creativity in Coimbra, Portugal later this week, becoming the first Indian entrepreneur to take stage at this premium global event industry convention and...

MAM Marketing MAM
‘Beautiful by Nature’: JOYquestions Stereotypes in a Brand New Campaign with Mouni Roy

People are conditioned into following certain pre-defined beauty standards of how a woman should look, behave and carry herself around. Physical appearance has always been the yardstick to measure a woman’s beauty

MAM Media and Advertising Ad Campaigns
India gets their first-ever international standard Motion Capture Lab

An institution in the entertainment & storytelling sector, Famous Studios once again proves its leadership position.

MAM Marketing MAM
HDFC Life chooses Music to connect with young millennials

HDFC Life Insurance Company, one of India’s largest private life insurers, launched the second edition of its successful campaign #YoungandResponsible on 15 November 2018.

MAM Marketing MAM
Droom ramps up its marketing momentum with the launch of an integrated radio/cinema campaign in major cities across India!

Droom, India’s largest and pioneering online automobile transactional platform, has today announced the rollout of an integrated marketing campaign.

MAM Media and Advertising Ad Campaigns
Realme introduces its new visual identity system and logo

Realme, the smartphone brand that specializes in providing high quality products for youth, launched its fully upgraded Brand Visual Identity system and Logo to provide a new visual experience and emotional connection with young consumers.

MAM Marketing MAM
Business Entrepreneurialism sees emergence of Social Entrepreneurialism: Ipsos Survey

According to a new survey by Ipsos, a global market research agency, the traditional definition of entrepreneurialism is now undergoing a metamorphosis of sorts and is moving from pure play business entrepreneurialism and is adding a key element of social entrepreneurialism to make a definitive...

MAM Marketing MAM

Latest News

Load More

Sign up for our Newsletter

subscribe for latest stories