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FY-2015: Emami marketing spends up 41%, PAT up 21%

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BENGALURU: Emami Limited spent 41.3 per cent more towards its Advertisement and Sales Promotion (ASP) in FY-2015 (year ended 31 March, 2015, current year) at Rs 391.19 crore (17.7 per cent of Total Income from Operations or TIO) as compared to the Rs 277.41 crore (1.5 per cent of TIO) in the previous year.

The company?s profit after tax (PAT) increased 20.6 per cent in the current year to Rs 485.45 crore (21.9 per cent of TIO) from Rs 402.27 crore (22.1 per cent of TIO) in FY-2014. Emami?s TIO in FY-2015 at Rs 2217.25 crore increased 2.18 per cent from the previous year?s TIO of Rs 1820.77 crore.

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

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.

Historically, Q3 (the festival season in India) of a financial year has been the best quarter for Emami in terms of TIO and PAT, which peak in Q3. The next best quarter has been the fourth quarter of a financial year before sales and profits dip to the lowest in a year in Q1 (the summer and the beginning of the educational holiday season in India) followed by a rise in Q2.

Refer to Fig A below for ASP during the 16 quarter period starting Q1-2012 until the current quarter.ASP in Q4-2015 was 66.5 per cent more at Rs 82.47 crore (14.9 per cent of TIO) as compared to the Rs 49.53 crore (11.1 per cent of TIO) spent in the corresponding year ago quarter but 30.8 per cent lower than the Rs 119.25 crore (17.2 per cent of TIO ) in the immediate trailing quarter.

During the 16 quarter period under consideration in this report, Emami?s ASP was the highest in absolute rupees in the immediate trailing quarter (Q3-2105) at Rs 119.25 crore (17.2 per cent of TIO), while in terms of percentage of TIO, it was 21.3 per cent (Rs 102.84 crore) in Q1-2015. The lowest ASP by Emami in both in absolute rupees terms and as percentage of TIO was in Q4-2013 at Rs 36.6 crore and 9.2 per cent respectively during the period under consideration.

In Fig A, the slope of the graph represented by the broken maroon line indicates that ASP in terms of percentage of TIO shows a slight increasing trend, and intercepts the Q4-2015 ordinate at 16.26 per cent, as opposed the 14.9 per cent actually spent by the company. The slope of the broken maroon line indicates that the ASP in terms of absolute rupees intercepts the Q4-2015 ordinate at Rs 94.3336 crore as compared to the Rs 82.47 crore actually spent by the company.

As mentioned above, the company?s TIO is generally the highest in Q3 and lowest in Q1 of a financial year. In Q4S-2015, Emami reported TIO of RS 553.66 crore, which was 24.2 per cent higher y-o-y as compared to Rs 445.71 crore, but declined 20 per cent as compared to the Rs 692.26 crore in Q3-2015. Please refer to figure B below, in which the quarter on quarter percentage change of TIO is indicated by the red line with yellow markers.

During the 16 quarter period under consideration, Emami TIO was highest in Q3-2015 at Rs 692.26 crore and lowest in Q1-2012 at Rs 299.91 crore. The black broken trend line shows that the company?s TIO is increasing linearly. The slope of the trend line intercepts the Q4-2015 ordinate at Rs 574.948 crore, indicating that the company?s performance at 553.36 crore was lower than that indicated by the trend line.

The company?s PAT follows the same trend of being the highest in Q3 and the lowest in Q1 during the period under consideration in this report. PAT in Q4-2015 at Rs 138.33 crore (25 per cent of TIO) was 21.9 per cent more than the Rs 111.15 crore (24.9 per cent of TIO) in Q4-2014, but declined 24.7 per cent from Rs 183.70 crore (26.5 per cent of TIO) in Q3-2015. Please refer to Fig C below.

During the 16 quarter period under consideration, the highest PAT both in terms of absolute rupees as well as percentage of TIO was in the previous quarter at Rs 183.7 crore and 26.5 per cent respectively.The lowest PAT in terms of absolute rupees and percentage of TIO was in Q1-2012 at Rs 41.5 crore and 13.8 per cent respectively.

The slope of the pink broken trend line indicates its intercept of Q4-2015 at 23.52 per centof TIO as compared to the actual 25 per cent of TIO achieved by Emami. The slope of the broken blue line shows its intercept with Q4-2015 atRs 134.6008 crore as compared to the Rs 138.33crore PAT actually achieved by the company. Both trend lines inclinedlinear increments. 

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