Expect rural growth to initiate from Q1 or H1 of next fiscal: NH Bhansali, Emami


NH Bhansali, CEO-Finance, Strategy & Business Development, Emami, says “margins have really improved compared to the previous year and this has helped us improve on the EBITDA and the PAT by double digit despite a very low single digit growth. We feel this margin would sustain because in the past periods, there had been a substantial increase as well. We expect this kind of margin and this price level to continue.”Revenue growth was weakish because of the winter portfolio that did not do well. 30% of your sales come in from the Boroplus side. So, going forward, at least in Q4, what could you expect in terms of revenue? Was this only a one-off in terms of weak performance of the winter portfolio that we are seeing such a subdued growth in terms of revenue?
NH Bhansali: Yes, for the quarter it is not 30%. In fact, winter products contribute 65% for the quarter. This was the warmest winter and on top of it, the rural demand was contained. So, inflation and rural off-takes also were weaker. Both taken together, despite these challenges, we could perform a positive growth with a 1.4% growth on revenues and EBITDA growth of double digits. On the performance side, we are happy with the kind of performance which has been demonstrated.

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What is the understanding you are getting from the rural side?
NH Bhansali: The rural has still not started that kicking off and so, we expect the rural growth to initiate maybe from the first quarter or first half of the next fiscal only. There is a lot of optimism. A lot of initiatives have been taken by the government and on top of it, the rainfall has also been good and is expected to be good across. We expect that rural growth has to resume from the first half of the next fiscal.

There is a trend where local players are doing much better than the organised players. Local competition is gaining pace as well. Is that something that you are worried about? Is that still the case for the company as well?
NH Bhansali: Not really. If you look at the product portfolio of Emami, we provide the value for money products and so we cater to the masses. These products are affordable to the masses with a lot many LUPs in the place. So, that really is not a challenge. But as I said, there has been a lot of downtrading and the people are also looking for meeting their primary needs rather than looking into the discretionary products. So, that has been a challenge.

Once the economy starts looking up and more particularly the rural, we expect a double impact to flow in from the next fiscal.

In terms of margins, we are seeing an expansion this time in terms of margins as well. What is the margin that you are seeing going forward and obviously commodity costs keep coming down. Is that something you are looking to pass on to the customers as well then?
NH Bhansali: Margins have really improved compared to the previous year and this has helped us improve on the EBITDA and the PAT by double digit despite a very low single digit growth. We feel this margin would sustain because in the past periods, there had been a substantial increase as well. We expect this kind of margin and this price level to continue.

Let us talk about the D2C business, which has been picking up pace as well. You have managed to see a strong performance in both your D2C brands whether you look at the Man Company or whether you look at Brillare. Both of them have seen a strong performance and Man Company has actually managed to turn EBITDA positive as well. What is the trajectory now for Brillare? What is the expectation in terms of breakeven point for that?
NH Bhansali: Both the Man Company and Brillare have demonstrated good growth of above 75% during this quarter and they are on an aggressive growth path and also would be improving on the EBITDA. So, there is a clarity on path to profitability and profitable growth is expected from these two brands. These two investments and also from other brands as well going forward.

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