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Marico
Coconut oil business:
Volumes in the coconut oil business could see a slowdown due to the 32% increase in retail
prices over the past six months. The volume growth slowdown would partly be a result of a
slowdown in conversion from loose oil to branded oils as the price differential increased.
Marico charges a 150-160% premium for Parachute over loose oil. However, the company
believes that the impact on volumes will not be profound, as 70% of the rigid packs (75% of
total sales) come from 200-500ml packs and that segment would absorb the price hikes
relatively smoothly.
Rural vs. urban:
Marico’s rural vs urban split is 25% primarily due to the essentially urban focus of Saffola and
Kaya sales. For Parachute, rural sales represent 45% of the total sales.
International business:
Regarding acquisitions, the company is focusing on South East Asia and Africa; ICP, the new
Vietnam acquisition, fits into that strategy. ICP’s sales breakdown is 85% personal care and
15% foods; 70% of the personal care portfolio is male shampoos and deodorants. ICP’s
gross margin is c.50% (vs. 51% for Marico) with EBITDA margin of 11% (vs. 14% for
Marico). The company’s ad/sales ratio is c.15%.
MENA (mainly Egypt and Dubai) contributes 7-8% of the company’s sales and the current
unrest could result in a loss equating to a month’s sales.
Kaya clinics:
The company expects to break even in the Kaya business in FY12. The turnaround in the
business has resulted from a focus on repeat business from customers rather than a
“problem-solving” positioning, and higher product sales as a proportion of overall Kaya sales.
The company plans to open 2-3 Kaya clinics in India and 3-4 clinics in the Middle East.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Marico
Coconut oil business:
Volumes in the coconut oil business could see a slowdown due to the 32% increase in retail
prices over the past six months. The volume growth slowdown would partly be a result of a
slowdown in conversion from loose oil to branded oils as the price differential increased.
Marico charges a 150-160% premium for Parachute over loose oil. However, the company
believes that the impact on volumes will not be profound, as 70% of the rigid packs (75% of
total sales) come from 200-500ml packs and that segment would absorb the price hikes
relatively smoothly.
Rural vs. urban:
Marico’s rural vs urban split is 25% primarily due to the essentially urban focus of Saffola and
Kaya sales. For Parachute, rural sales represent 45% of the total sales.
International business:
Regarding acquisitions, the company is focusing on South East Asia and Africa; ICP, the new
Vietnam acquisition, fits into that strategy. ICP’s sales breakdown is 85% personal care and
15% foods; 70% of the personal care portfolio is male shampoos and deodorants. ICP’s
gross margin is c.50% (vs. 51% for Marico) with EBITDA margin of 11% (vs. 14% for
Marico). The company’s ad/sales ratio is c.15%.
MENA (mainly Egypt and Dubai) contributes 7-8% of the company’s sales and the current
unrest could result in a loss equating to a month’s sales.
Kaya clinics:
The company expects to break even in the Kaya business in FY12. The turnaround in the
business has resulted from a focus on repeat business from customers rather than a
“problem-solving” positioning, and higher product sales as a proportion of overall Kaya sales.
The company plans to open 2-3 Kaya clinics in India and 3-4 clinics in the Middle East.
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