P & G Volumes Drop

Soaps and detergents contribute to about 23 per cent of sales but this has come down from 30 per cent in 1996-97. In 1996-97, volumes in this segment declined by nearly 36 per cent over last year. Ointments and creams, which account for 18 per cent of turnover, too display a similar trend. Though sales have gone up 19 per cent to Rs 71.08 crore, volumes have dropped 8 per cent to 988 tonnes.

At the operating level, margins have increased from 15.47 per cent to 18.91 per cent. But P&G has written back excess provisions thereby lowering raw materials consumed by Rs 15.18 crore. If this had not been done, the operating margin would have actually been slightly lower than last year.

 

It has also increased the rates of depreciation on fixed assets from 1996-97 which resulted in a higher depreciation burden of Rs 15.56 crore. The increase in rates has been given effect in a year in which a new plant at Goa has been commissioned. There was a net increase in the gross block to the tune of Rs 60 crore. This, along with the additions due to the expansion at the Hyderabad plant this year, will see a higher depreciation burden.

Analysts say that the fall in volumes is more due to a slowing in the growth of the market. Also, P&G is restructuring its method of recovering costs from the group companies for whom it undertakes manufacturing activities. Though details are unavailable, it is reportedly more beneficial to the company giving it higher margins. In 1996-97, expenses shared by group companies went up from Rs 13.77 crore to Rs 18.74 crore. Hence, a moderate sales growth was compensated to some extent by higher recoveries.

In the feminine care segment, it has launched Whisper Extra Dry in July 1997 which will contribute to the revenues in this year. Analysts are expecting the company to launch more products in this category and consolidate its position. Vicks Sinex has been launched while it is testing the markets for Vicks Super Balm and Vicks Vitamin-C. Exports are expected to contribute more in the coming years.