Q1-2016: Emami spends Rs 142.06 crore towards marketing

BENGALURU: Emami Limited spent 38.1 per cent more towards Advertisement and Sales Promotion (ASP, marketing) in Q1-2016 (quarter ended 30 June, 2015) at Rs 142.06 crore (24.1 per cent of Total Income from Operations or TIO) as compared to the Rs 102.84 crore (21.3 per cent of TIO) in the corresponding quarter of the previous year. Emami’s Q1-2016 ASP was 72.3 per cent more than the Rs 82.47 crore (14.9 per cent of TIO) in the immediate trailing quarter (Q4-2015).

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 ChandiChyawnprash Plus, Zandu Kesari Jivan,etc. 

Emami director Mohan Goenka said, “The first quarter of 2015 has been challenging with subdued economic environment and unfavourable weather, which is expected to continue. Notwithstanding such hurdles, Emami has ensured a good performance to deliver a profitable growth during the quarter. Strong performance by all our power brands in key categories coupled with growth in International business has helped us to register a 22.4 per cent top line growth.”

Please refer to Fig A below for ASP during the 17 quarter period starting Q1-2012 until the current quarter. ASP in Q1-2016 has been the highest by the company in terms of absolute rupees and in terms percentage of TIO at Rs 142.06 crore and 24.1 per cent. Historically, as is evident from the figure below, Emami’s ASP has been the highest in Q3 of a financial year (the festival season in India) and the next highest in Q1, with the company spends the lowest towards marketing in Q4.

During the 17 quarter period under consideration in this report, Emami has spent the lowest towards ASP in terms of absolute rupees and percentage of TIO in Q4-2012 at RS 36.60 crore and 9.2 per cent of TIO. The broken blue and maroon trend lines indicate that the company’s ASP shows a linear increasing trend in terms of absolute rupees and percentage of TIO.

Also historically, Q3 of a financial year has been the best quarter for Emami in terms of TIO and PAT, which peaked 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. Please refer to Fig B below.

In Q1-2016, Emami reported TIO of Rs 589.87 crore, which was 22.4 per cent more than the Rs 481.73 crore in Q1-2015 and was 6.5 per cent more than the Rs 553.66 crore in Q4-2015..

During the 17 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 broken brown trend line shows that the company’s TIO is increasing linearly.

PAT in Q1-2016 at Rs 87.75 crore (14.9 per cent of TIO) was 23.9 per cent more than the Rs 70.80 crore (14.7 per cent of TIO) in Q1-2015 but was 36.6 per cent lower than the Rs 138.33 crore (25 percent of TIO) in Q4-2015.

Company Speak

Domestic business in the first quarter grew steadily to achieve a healthy topline growth of 23.4 per cent. Despite prevailing macro-economic challenges and not very favourable weather, both the consumer care and the health care segments have performed considerably well.

New brands such as Fair and Handsome Instant Fairness Facewash, Emami 7 Oils in One, Zandu Balm Ultra Power and ‘HE’ Deodorant continue to contribute to the growth during the first quarter.

The quarter also witnessed the launch of a brand extension - Zandu Gel Balm Junior, the first ever gel based balm for kids in the country. The company also scaled up its spend on both advertisement and brand building during the quarter. Despite the high increase in ad spends, the company’s EBIDTA during the quarter rose by 32.9 per cent, bettering industry average.

Aggressive marketing campaigns, both ATL and BTL delivered rich dividends in terms of growth of most of Emami’s Power Brands. Navratna Oil, Navratna Cool Talcum Powder, Zandu Balm, MenthoPlus Balm, Fair & Handsome and Zandu HCD Range grew in healthy double digits and enhanced their respective market shares.

With increased emphasis, improved visibility and focused execution, the Modern Trade business and Direct Rural business continued to grow at a steady pace.

Emami director Harsha V Agarwal said, “Prudent approach, efficient cost management and robust business model have helped us to meet the challenging environment to remain competitive and profitable. For the long term, we will continue to focus on cost efficiencies and invest in R&D and brands to further grow our market share. As part of our aggressive growth strategy, we acquired the Kesh King business during the first quarter FY-2016 and forayed into the Ayurvedic Hair & Scalp care segment. The Kesh King business is being integrated with Emami’s existing business and it has already started contributing to the growth. We plan to make Kesh King a pan-India brand soon.”

Emami acquired hair and scalp care business under the ‘Kesh King’ and allied brands for Rs 1684 crores. The company raised around Rs 950 crore debt to partially fund the acquisition. The balance was funded by internal accrual.

Latest Reads
Ogilvy India makes key top-level appointments

MUMBAI: Advertising agency Ogilvy India has announced the appointment of Prem Narayan as its new chief strategy officer and Balagopalan Ganapathy as the new head of planning, Ogilvy Mumbai. Narayan and Ganapathy have started in their respective roles with immediate effect.

MAM Media and Advertising People
SVG Columbus debuts with big wins at IAMAI's 8th India Digital Awards

SVG Columbus has been honoured with 2 Golds and 1 Silver by the Internet & Mobile Association of India (IAMAI) on its debut. For the record, SVG Media was acquired by Dentsu Aegis Network in April 2017. Post the acquisition, SVG Media launched Columbus – an agency focused on Data Driven...

MAM Marketing MAM
81% Indians find ads intrusive: KMB study

MUMBAI: A well-executed multichannel campaign is a thing of beauty. But over one in four of the campaigns we see are not well integrated, and consumers are much more critical than marketers about campaign connectivity. Also, less than half of all campaigns take full advantage of different channels...

MAM Marketing MAM
Vivo YouTube campaign saw better response using Vogon

MUMBAI: Chinese smartphone brand Vivo rolled out a digital campaign - ViewTube, giving a new wave to YouTube’s ongoing TrueView Ads. With the launch of its V7 model, Vivo leveraged Google’s Director Mix tool to launch a campaign that offers a unique creative solution to gauge higher viewer...

MAM Marketing MAM
Big Bazaar launches game to promote R-day sale

MUMBAI: Hypermarket chain from Future Group, Big Bazaar, has created a mobile game to promote its mega property, ‘Big Bazaar Sabse Saste 5 Din’. Designed and executed by L & K Saatchi & Saatchi, Big Bazaar’s innovative deal game is set to transform the shopping experience in India....

MAM Marketing Brands
Inito gives anxious couples hope through its new ad

The desire to have children is something that is harboured by millions of couples. But, in the eagerness to do so, many times this whimsical process ends up becoming strenuous and stressful for many. In order to help beat the woes for many such couples, Inito, a medical technology company, has...

MAM Marketing Brands
Vernacular content consumers to be 2.5 times English by 2021: Deloitte

MUMBAI: Deloitte India has launched the eighth edition of its report on technology, media and telecommunications which predicts major advances in machine learning, voice over LTE (VoLTE) technology services and over-the-top (OTT) platforms, apart from other trends.

MAM Marketing MAM
IAA's new initiative seeks to end rigidity in office timings

A new social initiative titled #WorkToLiveToWork has been undertaken by the International Advertising Association’s (IAA) India chapter with Nandini Dias, managing committee member of IAA and CEO of Lodestar India, at the helm. Dias lost two colleagues in separate accidents related to railways...

MAM Media and Advertising People
PVR promotes cleaner air

MUMBAI: Cinema exhibition company PVR Pictures has launched a new campaign called, #BeTheCommuter with an aim to promote clean air and curb pollution.

MAM Marketing Brands

Latest News

Load More

Sign up for our Newsletter

subscribe for latest stories