MAM

Q3-2016: Dabur marketing spends up 9.6% at Rs 350 crore

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BENGALURU: Dabur India Limited spent 9.6 per cent more year on year (YoY) towards advertising and publicity expenses (ASP) in the quarter ended 31 December, 2015 (Q3-2016, current quarter) at Rs 350.01 crore (16.5 per cent of Consolidated Net Sales or Total Income from Operations or TIO) as compared to Rs 319.38 crore (15.4 per cent of TIO) and 25.7 per cent more quarter-on quarter (QoQ) than the Rs 278.42 crore (13.3 per cent of TIO).

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

All numbers are consolidated unless stated otherwise

Dabur’s products

Among the products that Dabur has include health supplements like Chyawanprash, Ratnaprash, Honey, Glucose; digestives like Hamjola - Hajmola Chuzkara and Natkhat Amrud, Pudin Hara Fizz; OTC and Ethicals such as Lal Tail, Honitus Syrup; Haircare products like Vatika, Vatika Brave and Beautiful digital, Anmol Jasmine Marks; toothpaste brands like Dabur Red, Babool and Meswak; skincare products like Fem Natural Fairness, Gold Bleach, Gulabari; homecare brands such as Odomos, Odonil and Sanifresh; food brands such as Real and Real Active.

“The macroeconomic environment continues to be challenging and we faced several headwinds in the form of geo-political disturbances in key geographies in the Middle East and delayed winters in India. The ongoing political unrest in Nepal and blockade of the India-Nepal border severely impacted Dabur’s Foods business. However, we have taken steps to mitigate the impact by ramping up the production of juices in Sri Lanka and India to cater to our demand requirement, and are hopeful of reporting normal growths going forward,” said Dabur India CEO Sunil Duggal.

“The overall demand environment remained tepid in the third quarter with some key segments showing deceleration while competitive intensity was at a high. We are pursuing a prudent growth strategy and have taken steps to efficiently manage the emerging risks and challenges. Despite a sharp fall in growth rates in most consumer products segments, Dabur continues to focus on brand-building and market expansion programmes that will pave the ground for future growth. Going forward, we will continue to pursue an aggressive growth strategy,” concluded Duggal.

Trends

The company’s ASP in Q3-2016 at Rs 350.01 crore (16.5 per cent of TIO) in the current quarter was the highest in terms of actual rupee spends as well as in terms of percentage of TIO during the 13 quarter period starting Q3-2013 until Q3-2016. In the current fiscal, in Q1-2016, the company had spent Rs 330.61 crore (16 per cent of TIO) towards ASP, which is the second highest ASP in absolute rupees and in terms of percentage of TIO during the period under consideration. It must be noted that in 9M-2016 (nine month period ended 31 December, 2016) the company’s ASP has already exceeded the total ASP in FY-2014. In 9M-2016, ASP was Rs 921.77 crore, while in FY-2014, it was Rs 913.92 crore.

Also, over the 13 quarter period under consideration, Dabur’s ASP in absolute rupees and ASP in terms of percentage of TIO both show a linear increasing trend.

Please refer to Fig 1 below, which indicates that ASP in terms of percentage of TIO follows a linearly increasing zigzag line, with peaks in Q1 (school holiday period) and Q3 (festival season in the country) and valleys in Q2 and Q4 of a financial year. This has been further substantiated by the company’s ASP in Q3-2016.

Dabur’s TIO for the current quarter marked 2.1 per cent YoY growth at Rs 2,127.00 crore as compared to Rs 2079.02 crore and 1.3 per cent higher QoQ as compared to Rs 2,096.23 crore. The company’s TIO shows a linear increasing trend during the twelve quarter period under consideration in this report.

Consolidated Net Profit for Q3-2016 reported a 12.6 per cent YoY jump to Rs 318.54 crore (15 per cent of TIO) as compared to Rs 282.78 crore (13.6 per cent of TIO) but was 6.6 per cent lower QoQ than Rs 341.1 crore (16.3 per cent margin). PAT in absolute rupees as well as in terms of percentage of TIO show linear increasing trends during the period under consideration in this report.

Category Growths

Dabur says that its oral care business led by Dabur Red Paste and Meswak, continued to grow ahead of the industry. The Skin Care business reported a near 10 per cent growth during the quarter, while the Home Care business grew by over eight per cent. The Over-The-Counter (OTC) & Ethicals category ended the third quarter of 2015-16 fiscal with a near eight per cent growth. The International Business Division for Dabur reported a 14.8 per cent growth during the third quarter of 2015-16.

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