- Dabur India plans up to 4% price hike and reduced grammage in smaller packs to offset costs
- Inflation of 10% impacts most portfolios except home, personal care, and healthcare segments
- GST benefits will aid June quarter, but grammage cut in Rs 10 and Rs 20 packs will continue
Homegrown FMCG major Dabur India plans to increase prices by up to 4% and reduce grammage in smaller packs to offset rising input costs triggered by the ongoing West Asia conflict.
“With inflation picking up in India business, we expect part value growth through price increases along with volume growth that we have accounted,” Mohit Malhotra, global chief executive officer at the company, told analysts during a post-results interaction on Thursday evening.
“We are seeing an inflation of 10% hitting us across all our portfolios, barring home and personal care and healthcare. Therefore, we have announced a 4% price increase across different parts of the business to mitigate this impact,” he added.
The company said GST-related benefits are expected to continue aiding performance in the June quarter, particularly in smaller packs. However, Dabur will simultaneously reduce grammage in low-priced stock keeping units to manage escalating costs.
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“We are reducing grammage across all Rs 10 and Rs 20 packs, which we had increased after revised GST rates were announced in September last year. There's some headroom available and it's an easier call for us to make,” Malhotra said.
The maker of Hajmola and Real posted a 15% rise in consolidated net profit at Rs 369 crore for the March quarter, compared with Rs 320 crore a year earlier. Net sales increased over 7% to Rs 3,038.02 crore from Rs 2,830.14 crore in the corresponding quarter last year.
On its beverages business, the company flagged weather-related concerns due to western disturbances in north India, a key market for its drinks portfolio.
“In north India, where we are very salient in beverages, we are seeing thunderstorms and that makes me a worried man. But if El Niño is to go by, then I'll be happy and will see a double-digit growth in beverages and glucose going forward,” Malhotra said.
During the March quarter, Dabur's Activ portfolio, including juices and coconut water, continued to deliver strong double-digit growth.
The company reported 6% volume growth in its India business, while noting that rural markets continued to outperform urban regions by 350 basis points, although the gap has narrowed sequentially.
“We see overall FMCG growth at 9.2%, of which rural happens to be 11.4% while urban happens to be 8%, and we see the same reflection of Nielsen data in our business too. So, while rural continues to do well, sequential numbers show that the gap has reduced from 500 bps to 440 bps. From our standpoint, both markets are growing,” he said.
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