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The company held its conference call on 16 July 18 and was addressed by Mr. Sumit Malhotra MD
Key Highlights
The company achieved 8.7% volume growth on YoY basis in June 18 quarter.
After 11 quarters, the company is seeing double digit value sales growth. Lead brand Bajaj Almond Hair oil (AHO) has seen a volume offtake growth of 10%.
Improvement in rural area has resulted in significant improvements in volumes. Turnaround in light hair oil volume largely led by almond oil. In rural, AHO grew by 11.4% vis a vis growth of 4.7% in June 17 quarter in rural area.
Around Rs 21 crore of refunds due from GST for FY 18 is yet to be received.
Robust growth in hair oil volume was led by modern trade which saw a growth of 36% YoY, general sales trade also saw a decent growth of 17%, while the wholesale continues to diminish.
International business was cleaned up in June 18 quarter as inventory pipeline was cleaned up. Reboot of international business will be visible from H2 FY 19 onwards.
Overall hair oil market grew by 9.8% in rural area vis a vis 5.3% in June 17 quarter.
Rise in Kopra prices, also led to higher Amla and Almond hair oil sale.
The company was able to increase its market share. 59.4% market share in volume terms as on June 18.
Expects with the Rural growth and various income programs by government, the growth seen by the company will continue
Increased its reach in rural area. Overall company has total of 39.67 lakh outlets and direct reach of 4.8 lakh outlets. Significant increase in distribution network in past couple of years.
National launch of Nomarks brand done in June 18 quarter. 41% value growth in June 18 quarter. Launched new products. Competitive intensity has gone up in Nomarks and hence the need for relaunch and new products.
Increase in crude oil and rupee depreciation has resulted in higher raw material costs. Most of the negative impact has been contained due to increase in prices in April 18 and maintaining inventories. If the prices increase further, the company will look at raising MRP prices further.
After 3 years of zero price increase, April 18 was the first price increase. The company will take a call depending upon the raw material prices.
Other income was lower due to accounting standard on MTM of treasury bonds. There was around Rs 8.26 crore loss on account of MTM and there is no real loss but due to rise in yield this MTM has to be recognised.
Overall, the quarter has seen Rural volumes increases, improvement in leadership position, improvement in market share, improvement in margins, marked improvement in distribution and deeper penetration in rural sector and higher visible launch of ayurveda Nomarks. Expects the improvements to continue.
The new capacity is addition in Baroda of more than 1/3rd of the existing capacity will see the construction activities starting from Aug 18. The company will then focus on 3 large plants and eventually smaller plants will be shut down in the next 2 years.
Not desperate for any acquisitions and is cautious in the given environment.
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