Hit By Covid-19 Pandemic, Emami Q4 Pre-tax Profit Dips 81.7% To Rs 15.38 Cr

Hit by a severe demand crunch in an already muted environment, Emami Ltd posted a 16.81 per cent decline in its revenue at Rs 532.68 crore during the quarter ended March 31, 2020 with its pre-tax profit plummeting by 81.70 per cent at Rs 15.38 crore. Since its formation in 1974, this is one of the steepest declines the company has ever registered.

Emami had earned a revenue of Rs 640.35 crore in the fourth quarter (Q4) of the 2018-19 fiscal year with a pre-tax profit of Rs 84.07 crore.

After an adjustment of Rs 15.29 crore of deferred tax, the net profit in the period under review stood at Rs 22.75 crore, registering a fall of 59.44 per cent. During Q4 of 2018-19, net profit stood at Rs 56.09 crore.

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“FY 2019-20 has been one of the most challenging years for the company. The unprecedented Covid-19 pandemic brought about an environment where lives were at stake, which led to the already existing soft consumption trends to almost nil,” Mohan Goenka, director at Emami Ltd said.

Before declaring its results, Emami had already hinted at muted results for the Q4 period.

According to Emami, the business environment that was already facing challenges from weak consumption trends and liquidity concerns was further impacted severely by the Covid-19 pandemic. Further, nation-wide lockdown to control spread of the pandemic significantly disrupted operations from the last fortnight of March, which virtually came to a standstill until the first fortnight of April. The pandemic and the lockdown led to a sharp decline in consumption due to rising unemployment and a significant drop in demand from low-income groups.

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The company said that the pandemic also led the consumer shift towards more essential items like food, groceries and hygiene products thereby affecting its summer portfolio which usually comprises around 45 per cent of its sales. Besides mainstay products like Boro Plus, products in this category also comprise niche and discretionary products which took a hit.

“Current consumer trends which we believe is here to stay, indicate that categories like personal hygiene and natural health care products for boosting immunity and other wellness products are very clear preferences of the consumers today,” Harsha V Agarwal, director at Emami Ltd said.

To stave off the business impact of the pandemic, Emami, like its peers, tied up with delivery partners like Swiggy, Zomato and WOW Momo to directly reach out to the consumers with home delivery. It also quickly forayed into the hand sanitiser category with the BoroPlus brand and then launched an Ayurvedic hand sanitiser under the Zandu brand. It also recently expanded BoroPlus range of hygiene products to antiseptic and moisturizing soaps and handwashes in two variants.

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Despite the Covid impact, Emami said that during the last fiscal year, its power brands increased their market shares in both domestic and International markets. In the domestic business, Kesh King grew its volume market share by 140 bps at 26.6 per cent while balms category grew by 130 bps at 54.9 per cent. In the antiseptic creams space, BoroPlus grew by 30bps at 74.1 per cent and ayurvedic cool hair oil Navratna, grew by 10 bps at 66.4 per cent.