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Marico ups ad spend in fiscal as focus is on growth

MUMBAI: Marico has upped its advertising and promotional spends by a mammoth 76.52 per cent for the three-month period ended 31 March 2012, reinforcing its focus on volume growth rather than margins.

The company spent Rs 1.19 billion towards advertising in the final quarter, significantly higher than Rs 671.85 million that it consumed in the year-ago period.Advertisements and promotional spends were 14.3 per cent of the net sales in the quarter.

Marico‘s advertising budget will continue to be higher in the coming fiscal as it focuses on growth through value-added products in its various segments.

Marico’s net profit for the quarter fell by 2.67 per cent to Rs 696.971 million despite cut in product prices and high volume growth due to an increase in ad spend. Net sales grew 22.89 per cent to Rs 9.18 billion compared to Rs 7.47 billion a year ago.

For the full fiscal also, Marico‘s ad spend rose 29.78 per cent to Rs 4.49 billion, from Rs 3.46 billion in the earlier year.

Interestingly, Marico had said in August last year that the company would cut it ad spends and other costs to offset input cost pressure and avoid price hike.

However, the company increased its spending on advertising and promotions in each quarter of FY’12, barring the second quarter when it remained flat.

The major chunk of the spent was on the Saffola life World Heart Day Campaign 2011, which started in Q2 and continued in Q3 of FY’12.

For the three-month period ended 31 December 2011, the company had spent Rs 1.34 billion on advertising, a 48.62 per cent jump from the earlier year. During the second-quarter of the fiscal, the advertising spends were at Rs 941.49 million.

Even in the first quarter of the fiscal, Marico had increased spend on advertisement by 9.1 per cent as it had launched new products.

For the full fiscal, the net profit stood at Rs 3.17 billion, up from Rs 2.86 billion in the previous fiscal, a 10.71 per cent increase.

Marico’s annual net sales stood at Rs 33.97 billion as opposed to Rs 31.26 billion in the last year, registering a growth of 8.66 per cent.

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