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Q3-2015: Emami q-o-q marketing expenses up 16 per cent; PAT doubles

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BENGALURU: Over the past 12 quarters, Q3 of a financial year has traditionally been a good quarter for Emami Limited (Emami). The company’s advertisement and sales promotional spends have been highest during the period under consideration. Following its past convention, Emami increased its advertisement and sales promotion (ASP) spends in Q4-2015 by 16 per cent to Rs 119.25 crore (17.2 per cent of Total Income from Operations or TIO) from Rs 102.84 crore (21 per cent of TIO) in the immediate trailing quarter (Q2-2015) and 35.7 per cent more than the Rs 87.85 crore (15 per cent of TIO) in the corresponding year ago quarter (Q3-2014). During 9M-2015 (YTD), the company’s ASP was up 37 per cent to Rs 312.19 crore (18.8 per cent of TIO) from Rs 227.88 crore (16.6 per cent of TIO) in 9M-2014.

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

During a 12 quarter period starting Q4-2013 until the current quarter, Emami’s Q3-2015 ASP is the highest so far in terms of absolute rupees – Rs 119.25 crore (17.2 per cent), but Q2-2015 ASP in terms of per centage of TIO was highest at 21 per cent (Rs 102.84 crore). Fig A below indicates a steep upward linear trend for ASP in terms of absolute rupees and an upward linear gradient for ASP in terms of per centage of TIO. Traditionally, during the last three financial years (FY-2012, FY-2013, FY-2014), Emami’s ASP has been lowest in the fourth quarter and if the company follows the same trend, a drop in ASP for Q4-2015 can be expected.

Among the brands in Emami’s portfolio are Zandu, Zandu Balm, Himani Navratna, BoroPlus, Fair and Handsome, Emami Vasocare, Emami Mentho Plus, Himani Fast Relief, Zandu Sona Chandi Chyawnprash Plus, Zandu Kesari Jivan, etc.

PAT and Income

Emami’s PAT in Q3-2015 almost doubled (grew by 98 per cent) to Rs 183.70 crore (26.5 per cent of TIO) from Rs 92.76 crore (18.9 per cent of TIO) in Q2-2015 and was 21.9 per cent more than the Rs 150.68 crore (25.8 per cent of TIO) in Q4-2014. During 9M-2015, PAT at Rs 347.28 crore (20.9 per cent of TIO) was 19.2 per cent more than the Rs 291.32 crore (21.2 per cent of TIO) in 9M-2014.

Pease refer to Fig B below. In terms of absolute rupees and percentage of TIO, PAT shows an upward linear trend during the 12 quarter period under consideration.

Emami’s TIO in Q3-2015 at Rs 692.26 crore was 41.4 per cent more than the Rs 489.60 crore in Q2-2015 and 18.4 per cent more y-o-y from Rs 584.67 crore. During 9M-2015, TIO at Rs 1663.59 crore was 21 per cent more than the Rs 1375.06 crore in 9M-2014. TIO shows an increasing linear trend during the 12 quarters under consideration.

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