A trickle down effect of slowdown in core sectors of the economy has affected the topline show of personal care sector for the fourth quarter ended March 2001. The sector reported the lowest topline growth compared with the previous three quarters of the fiscal.
Aggregate sales income of 17 companies increased by 4.1 per cent to Rs 4,300 crore. A squeezing disposable income and a penetration of slowdown dampened the demand growth.
The companies had reported a sales income growth of 12.4 per cent for the third quarter ended December 2000, while it was five per cent in the second quarter ended September and 10.3 per cent for the first quarter ended June during the fiscal.
The decline in the sales growth was also a fall-out of lower consumption in rural areas because of a stagnant income and lower agricultural production. The rural areas accounts for over 50 per cent of the sales of the major players of the sector.
"A marginal or nil hike in support price for agricultural produce aggravated the situation further," says industry observers. Hindustan Lever's (HLL) single digit growth despite a significant penetration in the rural and semi-urban markets, which accounts for 19 per cent of the company's sales income, testifies this.
The sales income growth of HLL, which has a diversified product range and a broad-based soap portfolio, at 1.09 per cent in the fourth quarter of 2000-01 -- though constant compared with its third and second quarters sales income growth of 1 per cent -- was much lower as against that of 4.6 per cent recorded in the first quarter of the fiscal. Banking on lower expenses the company's net profit increased by 29.3 per cent to Rs 340 crore in the fourth quarter.
The fourth quarter figures of the 17 firms under review were, in fact, inflated with Nirma's bloated numbers owing to the merger of Kisan Industries with the firm during the fiscal (since April 2000). Excluding Nirma's financials, total sales of the remaining 16 companies would have increased by 1.5 per cent to Rs 3,710 crore.
Consider Nirma's post-merger figures: the firm posted a sales income growth of 24.5 per cent to Rs 590 crore in the fourth quarter of the fiscal, which was much lower to the over 40 per cent growth it had registered in the first three quarters of the year. The figures show a distinct mark of slowdown in the sales growth.
However, a gloomy aggregate topline show has been outdone by an excellent aggregate bottomline show by the 17 companies.
The net profit of all the companies under review grew by 27.9 per cent to Rs 461 crore in the fourth quarter of the fiscal. The growth was largely due to the conscious effort to control cost. Total expenses of the companies increased 2 per cent to Rs 3,694 crore during the quarter.
Procter & Gamble's sales dipped by 22 per cent, though the net profit increased by 19.9 per cent. Colgate Palmolive managed 17.7 per cent increase in the net profit despite a marginal .20 per cent increase in the sales income.
