The company saw lower margins overseas and slower sales in India, but says the worst is over
Image: Anindito Mukherjee / Reuters
Emerging market multinational Godrej Consumer Products Limited posted a lacklustre set of numbers as rising raw material prices impacted margins and net sales dipped marginally in India. This was a result of demand being adversely affected due to the recall of Rs 500 and Rs 1,000 currency notes. The company said India sales have since recovered.
Still, Godrej Consumer Products which, in addition to India, operates in Southeast Asia, Africa and South America, showed that is has the most resilient business model among consumer companies in India as international sales rose by 13 percent taking net sales to Rs 2,391 crore. Net profit rose by 4.9 percent to Rs 348 crore.
“Going forward, remonetisation should result in growth normalising in India over the next few months,” said Adi Godrej, chairman of Godrej Consumer Products. In addition to this, there are three factors that will result in improved performance in the next few quarters:
1) Price hikes – The company hiked soap prices by 2 percent – expect more hikes in other products
2) Slower rise in commodity prices
3) Increasing sales volume in India, which comprises 50 percent of overall sales
For now, the market also believes Godrej’s best days are ahead. The stock is up by 7 percent to Rs 1,590 since the numbers were announced on January 30.