EMAMI Prepared to regain momentum post destocking & Inventory Correction in Q1FY18

The Board of Directors of Emami Limited met on Wednesday, August 2, 2017 to consider the unaudited financial results of the company for the first quarter ended June 30, 2017.

The quarter witnessed significant destocking in the domestic market due to implementation of GST and also sizeable inventory correction in International markets. Domestic rural and wholesale markets which were recovering from demonetization were further impacted due to the implementation of GST. Further, geopolitical conditions in our International markets also impacted the business.

Due to such challenges, our consolidated revenues at Rs 541 cr declined by 16%. Consequently the profits also reduced. We continued to introduce new launches viz. Zandu Gel, Zandu Spray, Zandu Roll On, Fair and Handsome Oil Control Face Wash, HE On the Go Facewash and Navratna i-COOL Dynamite (a new variant of Navratna i-COOL talc), during the quarter and invested in their promotions aggressively which further impacted the bottomline.

Emami, however, expects to regain the ground as the market looks optimistic post GST and secondary sales in the International markets are also improving.

 Mohan Goenka, Director, Emami Limited said,“Apprehensions of GST and resulting uncertainties at trade level, particularly in wholesale and rural sales channels led to substantial destocking in domestic market. Primary offtakes faced reduction in such a business environment. This quarter, is therefore, not the representative of the business outlook of the Company. Going forward, we expect to regain the momentum in the balance period of the fiscal. We also expect to deliver a good growth in international business as we have already corrected inventory levels in major international markets over the past few months.”

Mr Harsha V Agarwal, Director, Emami Limited said:

A good monsoon, increasing infrastructure, enhanced government spending and streamlining of GST are expected to help in generating good growth on medium to long-term basis. We expect second half of the current fiscal to be better than the first half. We have undertaken restructuring of our distribution network in a big way. We believe that efficient direct distribution is always the best way to reach retailers so that the dependency on indirect trade such as wholesale reduces. While our power brands will continue to drive further penetration for higher growth, many innovative launches addressing the consumer need gaps are also in our plans.”