‘Unless there’s significant deflation next year, we are on track to deliver Rs 10k-cr revenue’

The firm is also betting big on rural markets and adoption of digital platforms and automation, its MD & CEO Saugata Gupta said in an interaction with Rajesh Kurup. Edited excerpts:

marico
Marico MD & CEO Saugata Gupta

Consumer major Marico expects to post Rs 10,000 crore in revenue in the next financial year, as its India and global businesses are on track, and discretionary and premium categories are showing signs of recovery. The firm is also betting big on rural markets and adoption of digital platforms and automation, its MD & CEO Saugata Gupta said in an interaction with Rajesh Kurup. Edited excerpts:

Marico posted a 16% rise in net profit in Q2. Where is the growth coming from?

The second wave of the pandemic had a significant impact but since the supply chain and everything was stress-tested in the first round, things were reasonably normal. Discretionary continues to get impacted, while anything related to home consumption, immunity and health got tailwind. What is worrying is inflation and input costs, whether it’s crude- or vegetable oil-led.

Is the impact of the pandemic easing, or are you still in the woods?

The organised players have managed the situation well. Last year our growth rates were pretty high and this year it continues to be decently good. As far as inflation is concerned, the answer is no. I believe some easing of crude and other vegetable oil prices would happen in Q4. It will take at least a quarter more for operating margins to improve.
Marico is expecting to post Rs 10,000 crore in revenue next fiscal, from nearly Rs 8,000 crore in FY21.

I think we are fairly confident of delivering double-digit revenue growth. Both our India and global businesses are on track and unless there is a significant deflation next year, we are reasonably on track to deliver Rs 10,000 crore. We are bullish about the business and also the fact that the discretionary and premium categories, which were soft during the pandemic, are also showing signs of recovery.

You forayed into Bangladesh with personal care products? How is Bangladesh, Vietnam and other global markets faring?

We are pretty confident of posting double-digit revenue growth in Bangladesh. As part of our diversification journey, we had launched shampoo — which was launched during lockdown and is doing well — and baby care products in the country.

Due to Covid-related lockdowns, Q2 was a soft quarter for us in Vietnam, but with easing of lockdowns we should be back on track. The Middle East and South Africa businesses are stable.Marico is also stressing on rural foray.
There is a tremendous potential as far as rural consumption is concerned, and with a good monsoon rural demand will continue to be buoyant over the medium term. For large players, direct distribution is a source of long-term competitive advantage, and as wholesale as a channel is reducing in importance, distribution will be a key driver. We are improving the quality of rural reach, and we will continue to do that over the next 3-5 years.

You are also betting big on automation and adopting digital platforms?

It’s a journey. How will we use the entire D2C brands is one, and e-commerce is another, while the entire consumer engagement is also important. Then there is analytics and automation. I think it’s a 3-5 year journey. In the next 3-4 years, we need to get critical mass in the D2C brands and ensure that e-commerce continues to drive the premiumisation. We should be definitely in the top quartile as far as digital capability is concerned.

You had invested in start-ups like Beardo and Just Herbs? Are you also looking at similar investments?

We will continue to look at start-ups as a part of our digital journey as a strategic investor like us can add value to the business and also there is a great learning from these digital brands. Beardo is tracking well, Just Herbs is also scaling up.

Are companies now increasing their advertising spends?

During the last 4-5 quarters advertising spends were a little subdued. Now with things opening up, we believe that our adver-tising spend is likely to go up from this quarter, and I think it should go up by at least 100 basis points over the next couple of quarters.

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