Fast-moving consumer Goods (FMCG) major Marico Ltd stated in its quarterly update that 30 per cent of its India business benefited from the implementation of GST 2.0, and that consumer sentiments have increased.
Marico stated that during the quarter, the domestic business continued to exhibit steady momentum through July and August, while having to absorb the transitory impact of disruption in trade channels and purchases by the canteen stores department ahead of the implementation of new GST rates in September.
“The recent GST rate rationalisation announced by the Government is a welcome step toward stimulating demand and long-term growth in the FMCG sector. 30 per cent of our India business has benefited from the GST rate rationalisation. In line with the intent of the government’s measures, we have passed on the benefits of revised GST rates to consumers across relevant product categories, reinforcing affordability and accessibility,” the company informed the stock exchanges.
Volume growth
India’s underlying volume growth remained in high single digits, with Parachute recording a low single-digit decline in volumes amidst hyperinflationary input costs and pricing conditions. Saffola Oils delivered flattish volumes with a high base and revenue growth in the high teens, while value-added hair oils delivered high teens growth, reflecting a sustained recovery path. Foods and Premium Personal Care (including digital-first brands) maintained the accelerated scale-up during the quarter.
The company said the consolidated revenue growth on a year-on-year basis will touch the thirties on the back of pricing interventions with mix improvement. Marico stated that it offered additional discounts on the inventory to channel partners during the two weeks leading up to the effective date of the GST rate changes.
Input costs
“Among key inputs, copra prices remained rangebound after correcting ~10-12 per cent from the highs. Vegetable oil prices also sustained high levels, while crude oil derivatives were benign. Owing to the above, gross margin is expected to come under incremental pressure, on a relatively high base and partly due to the pricing-led high denominator effect. We expect gross margin pressures to ease in the second half of the year ,” the company stated.
The company’s international business maintained its robust momentum with constant currency growth touching the twenties.
“Bangladesh and MENA businesses visibly outperformed, while other markets were steady in their course,” added Marico.
