GCPL Q2 net profit surges 22% on volume growth

BS Reporter, Business Standard, 24 October 2015

Beating street estimates, the consumer arm of the Adi-Godrej Group reported a 22.44 per cent increase in consolidated net profit to touch Rs 287.16 crore for the three months ended September 30, 2015. Net sales was in line with street estimates, growing nearly 10 per cent to touch Rs 2,242 crore for the quarter under review.

The India business, which gives Godrej Consumer (GCPL) nearly 52-53 per cent of its overall revenues, grew 9 per cent, aided mainly by volume growth. This is the second straight quarter of strong volume growth for the firm, though it was marginally below the June quarter number, when volume growth was around 12 per cent, analysts tracking the firm said.

GCPL MD Vivek Gambhir said this was on account of the mid-single-digit (around 5-6 per cent) volume growth that the firm saw in the September quarter in soaps, the segment that gives the company 35 per cent of its revenues. In the June quarter, soaps had reported a double-digit volume growth (12-13 per cent), which Gambhir said was difficult to sustain in the September quarter owing to depressed market conditions."

Soaps is also a mature category unlike hair colour and household insecticides, where penetration levels are lower," he said. GCPL, for the record, is the second-largest soaps maker in India after Hindustan Unilever (HUL).

Household insecticides and hair colour, which give GCPL 45 per cent and 20 per cent of its revenues respectively, saw volume growth of around 10-11 per cent for the September quarter.

Slightly below June quarter volume growth of around 12-15 per cent, analysts said.

"Our estimate is that the second half of the year will be better than the first half," Gambhir said. "Our numbers reflect the all-round focus on both urban and rural. This is something we will maintain in the coming quarters," he said.

In the last few months, GCPL has increased its presence in rural areas, taking coverage from around 55,000 villages to 60,000 now. While this number is expected to grow, GCPL is expected to focus its attention on the top 20,000 villages to improves sales.

On the distribution front, the focus will be to improve direct coverage out of the total 4.7 million outlets in urban and rural areas that the company reaches, Gambhir added.

The company is also expected to step up its focus on new areas such as health and wellness and beauty, taking brands such as Protekt and B:Blunt from modern trade into general trade."

This is our endeavour to be future-ready and identify new areas, where we can grow," he said.

In terms of acquisitions, Gambhir said, that India, Indonesia and Africa were priority markets for the firm.