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Raw material costs, inflation main challenges in FY13: Emami

Press Trust of India/New Delhi 05 Aug 12 | 11:35 AM

Rising raw material costs, high inflation and competition will be challenges in the ongoing fiscal, FMCG firm Emami has said but it remains positive to grow on the back of cost efficiency measures and strengthening of distribution network.

According to the company, which sells personal and healthcare care products under the brands like 'Boroplus' and 'Sona Chandi Chywanprash' among others, rising crude oil, mentha oil and other raw material costs are threatening margins.

"The company is engaging in advance raw material booking to minimise the impact of inflation and also evaluate backward integration into producing some raw materials," Emami Ltd MD S K Goenka said in the company's Annual Report 2011-12.

The Kolkata-based firm also said it expected a high to moderate inflation to impact consumer spending and cost management.

"We expect to enhance efficiency to minimise this impact and offer innovative solutions to consumers," Goenka added.

Goenka also cited competition from regional and organised national players as one of the main challenges.

Despite a challenging economic environment, the company expects to grow over the coming years as it looks to initiate a combination of initiatives, he added.

Cost efficiency program is institutionalised across the organisation covering all functions and expenses, he said.

"We are strengthening our distribution network by appointing more super stockists, sub stockists and direct retailers. We are investing in our rural distribution channel and planning to add more people in direct sales force," Goenka added.

Emami is also focusing on its healthcare and over-the-counter Zandu product portfolio coupled with new launches to drive growth.

"On the back of these initiatives, we expect to graduate the company to the next growth level, generating increased revenues over the coming years," Goenka said.

For the 2011-12 fiscal, Emami posted revenues of Rs 1,454 crore. Its profit after tax stood at Rs 259 crore.

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