RB's India growth flattens in spite of PM Modi's Swachh Bharat boost

The company saw sales growth slowing to 1.8% in FY18

RB India, the local arm of British consumer goods giant Reckitt Benckiser, hit a slow lane in 2017-18.

The maker of widely used hygiene brands Dettol, Lysol and Harpic registered a 1.8 per cent rise in revenue from the year before, to Rs 58.1 billion (data from the office of the registrar of companies). This was much below the rise for the earlier two years, of 13 per cent in 2016-17 and 16 per cent in 2015-16.

The profit numbers for FY18 and FY17 were not available. In FY16, the net profit jumped 105 per cent to a little over Rs 15.1 billion.

RB’s India business depends heavily on its health and hygiene related products. Since 2014, this had been riding on the growing awareness on these subjects. In line with Prime Minister Narendra Modi’s flagship Swachh Bharat Mission, it had launched a Rs 1-billion campaign to further promote hygiene products. 

Dettol contributes an estimated 60 per cent of RB’s revenue here; Harpic generates a little over 10 per cent.

Rival Hindustan Unilever that sells hygiene products under the Lifebuoy and Domex brands, had raised a pitch on similar lines. It had begun a drive to educate consumers in Bihar about the importance of hygiene. It then expanded this in early 2018 with a Swachh Aadat, Swachh Bharat programme, targeting children across India. 

Kolkata-based ITC that owns rival brads Savlon and Nimyle is also trying to lure consumers.

Reckitt’s performance in FY18 might be showing the impact of the then newly introduced goods and services tax (GST), which took effect from July 1, 2017. The firm had noted a loss of sales in mid-2017, when businesses were struggling to realign operations with the new tax regime. The third-party distribution system, comprising mostly the wholesaler and stockist channels, had come to a near halt.

RB’s global management had said in July 2017 that “sales have been hit by the (GST introduction), which has prompted retailers to slash their prices”, referring to its June quarter business. “The company has suffered lower orders from some customers in June because of the new GST”.