Q1 Review: Emami Reports Strong Q1 Numbers
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00:00 Hello and welcome to BQ Prime's earnings conversation with Imami. I have with me
00:04 N.H. Bhansali, the company's CFO and CEO of finance strategy and business development
00:09 to decode the June quarter results. Thank you so much Mr. Bhansali for taking the time.
00:14 Let's do a quick recap of the numbers. So net profit was up 87 percent which was partly aided
00:20 by a drop in amortization expenses related to the acquisition of Keshkin. Revenue was up 7 percent.
00:28 EBITDA we have seen expanded 10 percent. Margins expanded 60 basis points at 23 percent. Volume
00:35 screw 3 percent. Overall it's a mixed set of numbers. Mr. Bhansali, first up a question
00:41 with respect to demand. So unseasonal rains and softer rural demand we have seen has spoiled
00:47 the first quarter. Could you explain what is the current consumption scenario and what will it take
00:53 to improve the demand going forward? We need to understand that it was the first quarter was
01:00 dominated by the summer portfolio and the summer is very erratic and there have been intermittent
01:07 rains also. So this impacted the summer portfolio while the summer brands declined by 5 percent
01:19 which contributes almost 41 percent of our turnover and but the non-summer brands which
01:24 contributes almost 59-60 percent kind of a turnover has grown by 16 percent. So the growth
01:30 is intact. Growth is good. It had to do more with the season and the intermittent rains which had
01:36 come up. Within this if you look at the growth even from the pain management to the oils to
01:43 the male grooming all have done reasonably well and even the channel wise the growth had been good.
01:50 Okay, so what is the current demand scenario looking like? Like has it improved like as we speak?
01:56 See I cannot say just on the current demand scenario or the outlook. It would be broadly
02:06 it is improving in terms of while the pain is still there in the rural side it is still there
02:14 but it is the things are improving. So as I said it has nothing to do more with the season rather
02:22 than the demand scenario. So all have been able to communicate. Okay, so right. So can we, is it
02:31 right to assume that you will be back to double digit growth trajectory in the ensuing quarters?
02:36 See we are expecting so. We are expecting and we are striving for that. Okay and what would be the
02:45 guidance on revenue and volume growth? See going forward we expect as you rightly say a kind of a
02:54 double digit growth we are expecting and there would be in terms of the margin expansion also
03:00 we expect around 200 plus basis points of EBITDA margin expansion as well. Right, that's mainly
03:07 driven by the decelerating declining input prices and so that would help us improve our margins as
03:17 well. Got it. So category wise we have seen Navratra of course that's a like very sum up
03:24 product so that has seen a dip in sales but going forward can we expect the sales to pick up or no
03:31 will you be focusing more on the winter portfolio? So Navratna, Kulthal, so even within the Navratna
03:39 there are talcums and there are oils. Right, so it's majorly a summer portfolio with the summer
03:46 when it is over in the winter the products are kind of Boroplus, Chavanprashas and other products. So
03:52 one has to look at the season and the brand mix. So with the normalized winters and summer we
03:59 expect a good growth to come in the times to come. Okay and what is the mix of the summer and the
04:07 winter portfolio? So as I said in the summer which contributes summer product summer products
04:15 contributed 41 percent in this quarter right in the first quarter and in the winter winter they
04:22 would winter products would contribute almost 60 percent kind of. All right, all right. Also can
04:29 you talk a little bit about Kesh game because in Q1 we have seen we saw a muted kind of growth there
04:35 so how much do you expect this category to contribute to your overall growth? You know it is
04:40 doing exceedingly well in fact in the previous year same quarter we have grown by 45 percent
04:46 so this two percent kind of a growth was also on the top of that 45 percent growth which has
04:52 been sustained so one need to look at it in the right context. Okay and what kind of interventions
05:00 are you undertaking to improve sales of the new products? There are several categories like
05:05 Dermicool and others so what kind of interventions are you taking? So many of the products we are
05:12 taking are taking them to the digital channel through digital channel through modern route
05:16 channel modern trade channel so we are taking many initiatives in terms of route to market in
05:23 in terms of the consumer preferences where to market them in the digital marketing also we are
05:28 taking a very aggressively so based on the product to product the strategies change.
05:34 Okay and how much does NPD contribute to your overall sales and would you like to maintain that
05:39 in FY24? It would be in the same range in fact see what happens is once these are not purely
05:48 new launches then few of them are also the brand extensions and the few kind of those channels but
05:55 the trajectory would continue. Okay so how much is the contribution from the NPD?
06:01 It would not be much it would not be very great it would be in the region of two three percent
06:08 max it could be lesser than so it depends on how you calculate.
06:13 All right got it Mr. Mathali you just mentioned about the digital efforts that you are taking
06:19 so modern trade and e-commerce have been a key focus area for the company so how much do this
06:25 channel contribute and also can you give a little bit you know on how are you planning to expand
06:30 your online presence? Yeah see the digital channels in fact the newer channels kind of
06:38 modern trade and this e-commerce the marketplace both are they are both contribute around nine
06:47 percent plus kind to our turnover our domestic turnover and they are growing in excess of 40-45
06:55 percent so in this quarter also they have gone by 45 percent in this going forward we expect the
07:01 growth would still be there the growth would be aggressive that yeah. Okay and also I would like
07:11 to know about your acquisition and inorganic growth strategy it has played a great role in your
07:16 overall strategy you acquired seven companies in the last seven ten years so are you considering
07:22 further acquisition? Yeah you are very right we have grown with the equations we have done the
07:28 right equations right from Zandu to Cash King then Cream 21 then we also acquired a kind of a Dermic
07:36 coal in the last last two last year so all the equations are doing well and going forward also
07:42 we would continue to look beyond the lookout for the equations which make sense for us those which
07:48 have a synergetic benefit with us and which fits well with our kind of a strategy and apart from
07:54 this we are also investing in this in the startup ecosystems we have made investments in few four
07:59 five startups there and with the strategic investments with the intent to nurture them
08:04 grow them and then over a period acquire them as well in consideration with the passionate promoters.
08:14 Okay but is there any particular category where do you see the potential?
08:18 So it would necessarily remain in the in the same category where we are playing in so it kind of
08:25 personal care and health care products which are based on Ayurveda or herbal or natural kind of
08:30 products. Got it lastly you know I would like to understand when do you expect the Amri hospital
08:37 demerger to get completed and that will help you know Imami reducing pledge by how much?
08:43 Oh that is not related to us but nevertheless it is we expect the same to be soon it would it can
08:50 happen anytime and the pledge would reduce substantially the promoters pledge would
08:56 reduce to around 18-20 percent of the promoters only so it would reduce substantially. Yes that's
09:04 that's yeah I just wanted to understand that's related to Imami group not the FMCG arm but still
09:08 it would you know you would be reducing your pledge by about how much you just said?
09:15 It would reduce to on just 18-20 percent the pledge would reduce to that much only.
09:21 All right got it all right okay thank you so much Mr. Bansali it was pleasure talking to you.
09:27 My pleasure thank you all the best.
09:36 [BLANK_AUDIO]