Marico to cut down ad spend

Consumer products maker Marico today said it would further cut down advertising expenses to offset input cost pressure and avoid price hike.

"Commodity prices are a big challenge for us...We have to manage cost in such a manner that we do not increase prices. So we have to look for other ways on how to cut cost," Marico Chairman and MD Harsh Mariwala told PTI on the sidelines of a Ficci event.

He said in order to bring down costs the company is likely to reduce its advertising spend to about 9% of the overall sales of the firm.

"There will be impact on our advertising spend. We have to cut down on the other expenses in order to meet the challenge [input costs pressure]," he said.

He said raw material prices have not stabilised but ruled out any price increases in the near future.

"Raw material prices have gone up a little bit...But I do not see any price rise happening," he added.

During the first quarter ended June 30, Marico had posted 33.17% increase in its net sales at Rs 1,048.61 crore, compared to Rs 787.40 crore in the same quarter last fiscal.

The company's total raw material and packaging costs increased to 57.1% of its total sales, compared to 51.2% of sales in the same quarter of last fiscal.

However, Marico's sales and promotion expenditure during the first quarter came down to 9.8% of sales, compared to 11.9%.

While announcing its first quarter results Marico had said that prices of copra, which accounts for about 40% of its raw material cost, was 96% higher than in Q1FY11.

"Market prices of safflower oil and rice bran were up by 27% and 45%, respectively, compared to Q1FY11," the firm said.

The company makes hair oil brand 'Parachute' and edible oil 'Saffola' among other products.

Marico's scrips closed at Rs 162.25, up 5.19% from the previous close on the BSE.