Overview

Emami Limited (NSE:EMAMILTD)is one of the leading and fastest growing personal and healthcare businesses in India, with an enviable portfolio of household brand names such as BoroPlus, Navratna, Fair and Handsome, Zandu Balm, Mentho Plus Balm, Fast Relief and Kesh King.1

Established in 1974, The Company has a portfolio of over 300 + products based on ayurvedic formulations. Emami's current operations comprise more than 60+ countries including. SAARC, MENAP, SEA, Africa, Eastern Europe and the CIS countries. Over 130 Emami products are sold every second somewhere around the world. Emami Limited, the flagship company of the Group, recorded a turnover of Rs 2655 crore, in 2019-20.

Emami acquired the heritage brand Zandu in 2008 on the basis of huge business synergy between the two brand portfolios.

Emami also acquired Ayurvedic Hair & Scalp business of "Kesh King" as a business strategy in 2015. In January 2019, the company also acquired Creme 21, a German brand with strong roots & brand recall.

In 2020, the Company forayed into the Home Hygiene Category with the launch of its EMASOL Range of Products.

The Company employs around 3200 people, reaches out to 45 lakh plus retails outlets through a network of over 3200 distributors and has invested in 7 plants, 4 regional offices, 1 overseas unit, 9 overseas subsidiaries, 26 distribution centres and 2 Associates across India.

Brands

For more than 35 years Emami has been innovating and launching brands meeting multiple consumer needs, spanning across various income groups, for young to old and everyone in - between. Emami is passionate about creating best in class and affordable brands in health and personal care markets. The company invite you to discover its brands.2

Emami is one of the largest homegrown Indian FMCG players across the personal care category. The Company offers consumer portfolio of more than 9 brands and 13 sub-brands. This portfolio has been periodically enriched or moderated with the objective to maximise consumer interest on the one hand and focus investments on a manageable portfolio on the other.

Over the decades, the Company focused on creating brands from scratch - distinctive, niche and potential leaders across categories. These Emami brands have successfully fused age-old ayurveda and modern science, resulting in efficacy and trust. The result is that Emami is a brand-driver that derives virtually all its revenues from proprietary brands.

  • BoroPlus
  • Navratna
  • Zandu balm
  • Fair and Handsome
  • Mentho plus balm
  • Fast Relief
  • Vasocare
  • Zandu Healthcare
  • 7 Oils in One
  • Kesh King
  • HE
  • Diamond Shine
  • Golden Beauty Talk
  • Narurally Fair

emami.jpg

Brand

Market Size (Rs. Crore)Market Share %Category Penetration level
Navratna Oil10260.660.15
Zandu & Mentho Plus Balms12620.550.37
BoroPlus Antiseptic Cream6450.740.24
Fair and Handsome Fairness Cream4010.650.04
Kesh King Oil9910.270.09

Plant location

  • Amingaon, Assam
  • Abhoypur, Assam
  • Pacharia, Assam
  • Dongari, Maharashtra
  • Vapi, Gujarat
  • Pantnagar, Uttarakhand
  • Silvassa, Dadra and Nagar Haveli

Overseas operations

Emami markets personal and health care products across 60 countries, with primary focus in Gulf & Middle-East, CIS, SAARC, Africa and SEA regions. Emami has dedicated manufacturing units in India and abroad to develop products suited to meet the diverse needs and preferences of consumers in different markets.3

Research & Development

Emami’s R&D team is engaged in the creation of a robust ayurveda-based product pipeline. The products are the outcome of an understanding of the unmet needs of consumers. The Company invested in a stateof-the-art research and development centre in Kolkata to focus on product innovation, product processing science, competition intelligence, analytical development, perfumery science, quality assurance, packaging and development. The 103-member team comprises scientists with cumulative experience of more than 1032-person years. The team has more than 17 PHDs and more than 35 post-graduates in various verticals.4

Business Overview

The financial year under review was challenging on various accounts. While, the industry had just recovered from the ripple effect of GST implementation and demonetisation, it was faced with an extended liquidity crunch following the fall of two major NBFCs in FY19 and FY20. Consumer spending declined significantly, resulting in weaker GDP growth. This was followed by the outbreak of COVID-19 pandemic across the world, resulting in a complete lockdown in India from the last week of March 2020. This impacted its fourth quarter revenues as a large part of the revenues from its summer portfolio are usually booked in the last fortnight of March. Despite these challenges, the Company reported revenues of H 2,65,488 Lac during FY20, a marginal decline of 1.6% over FY19. However, Cash Profit at H 63,924 lac grew by 1.7%

During the year under review, the company reenergised some of its brands. The company relaunched key brands like Kesh King and Zandu Pancharishta around new packaging and communication, which helped regain its growth trajectory. The company’s international business reported impressive growth of 16%, driven by timely restructuring and the successful integration of Creme 21 into its global portfolio. The company’s Power Brands increased their respective market shares; the company strengthened its modern trade format presence; it worked with key modern trade partners in developing joint business plans and enhancing merchandise visibility. The company ensured the availability of key Emami products across major e-commerce platforms, including marketplaces, grocery portals and dedicated personal care portals, resulting in 130% growth from the e-commerce business. During the year, the Company continued to undertake initiatives which helped it to strengthen the positioning of its various brands in the markets.

To effectively counter the prevailing challenges, the Company strengthened process efficiency through a cost saving project called WoW (War on Waste) by engaging a reputed global consultant to work across functions like media, raw material procurement, production, packaging and supply chain.

Emami reinforced its position as a company that shares rewards liberally when the Board of Directors approved a H 192 crore buyback offer at a price not exceeding H 300 per share. The Company believes that this buyback will reduce the number of shares outstanding, enhancing shareholders value.

The Company continued to be a responsible FMCG player and worked on reducing consumption of plastic packaging material. It undertook initiatives which helped to moderate use of fossil fuel and reduce carbon footprint. Besides, the Company took several steps to recycle water in its manufacturing units. The company believes that its business model will be more relevant in a new world facing the challenge of COVID-19 as consumers invest more in hygiene, healthcare and wellness. Emami is positioned to capitalise and resume its multi-year growth journey.

Financial highlight

November 5, 2020; Consolidated net profit jumped 23.39% to Rs 118.45 crore on 11.32% jump in revenue from operations to Rs 734.82 crore in Q2 September 2020 over Q2 September 2019.5

Consolidated profit before tax (PBT) surged 25.38% to Rs 146.85 crore in Q2 September 2020 as against Rs 117.12 crore in Q2 September 2019. Current tax expense for the quarter soared 41.94% to Rs 28.09 crore as against Rs 19.79 crore in Q2 September 2019. The Q2 result was declared during market hours today, 5 November 2020. The board declared an interim dividend of Rs 4 per share.

In H1 FY21, Emami has launched 20 new products which contributed to 4% of the domestic sales. Out of the 20 products, 8 were launched in Q2 FY21.

Emami closed the second quarter with an all-round record performance across brands. Despite COVID-19, the company posted a double-digit revenue growth for the quarter, with its domestic business recorded a 13% jump. The sustained growth momentum achieved by the Health & Hygiene segment along with the sequential recovery in the personal care brands aided the company.

During the quarter, rural markets continued to perform better than urban, aided by Government packages, relatively lower impact of the pandemic and the consumption shift due to reverse migration of labour. All the channels posted convincing growth with e-commerce channel tripling its revenues during the quarter. Modern trade, which was impacted due to social distancing norms in the first quarter has bounced back, registering a growth of 9% during Q2 FY21.

During the quarter, both the profits and margins of Emami increased significantly. Stringent cost control measures and benign raw material prices helped the company to improve its margins. Gross margins stood at 70.3% (up by 60 bps). While EBIDTA grew 33%, EBIDTA margin stood at 35% (up by 570 bps). Cash profits were at Rs 233 crore, increasing by 31% while cash profit margin stood at 31.7% (up by 480 bps).

International business grew by 11% led by Bangladesh and MENAP during the quarter. The company also introduced a hygiene range specially made for International Business which was well received. The Canteen Stores Department (CSD) business however declined marginally by 2% during the quarter.

Mohan Goenka, the director of Emami, said: "Emami is happy with the company's performance as majority of its portfolio returned to healthy growth, signifying improved consumer sentiment and supply chain operations. Rural offtakes have also started looking up and Modern Trade is now looking positive with malls openingup. The company's pain management portfolio has performed exceedingly well along with Kesh King, which has achieved its highest ever quarter sales. The company continue to undertake stringent cost control measures and are very optimistic of sustaining the growth momentum in the future."

References

  1. ^ http://www.emamiltd.in/about-us/1/company-profile.php
  2. ^ http://www.emamiltd.in/brands/
  3. ^ http://www.emamiltd.in/global-business/
  4. ^ http://www.emamiltd.in/images/annualreportpdf/20200825100100small460.pdf
  5. ^ https://www.business-standard.com/article/news-cm/emami-gains-after-q2-pat-spurts-23-to-rs-118-cr-120110501052_1.html
Tags: IN:EMAMILTD
Created by Asif Farooqui on 2020/11/30 17:15
     
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