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TM

Emami is a niche category player in the health, beauty and personal care since last 35 years. Company’s products are based on Ayurveda platform with strong entry barriers. Some of its key brands are market leaders in their respective categories. Strong R & D has developed power brands like ‘Navratna’, ‘BoroPlus’,

‘Menthoplus’, ‘Fast Relief’, ‘Sona Chandi Chyawanprash’, & ‘Fair and Handsome’. Company introduced India’s first fairness cream for men. With acquisition of Zandu, it now has one of the strongest Ayurvedic brand in its portfolio. Revenue reported CAGR of 23.7% in the last 5 years , while EBITDA and net profit grew by CAGR of 29.5% & 28.4% respectively. Company has spent about 16-19% of its revenues in adverting & promotional activities in the last 5 years, with CAGR of 17.4%.

Domestic revenues have been impacted in the 9 months ended Dec. ’13, with only 8.5% growth. Domestic sales constitute 84% of revenues, while Canteen Stores Department (CSD) and international division contribute 5% and 11% respectively. Company assigns lower growth to short summer and winter seasons, which is the main deciding factor in the demand for its products. However, profitability has been improved by reducing ad expenses and lower input costs as well as some price increases. Lower growth in sales revenues have been a cause of concern. However, management is guiding for 15% revenue growth from FY ’15 onwards for foreseeable future, out of which at least 10% should be volume growth, with new launches contributing 3-3.5% to revenue growth.

u Emami has created strong brand portfolio with eight of

its brands enjoying presence in top three, in their respective

categories. In four categories - balm, cooling oil, antiseptic

cream & men’s fairness its products enjoy more than 50%

market share. 60% of its revenues are derived from relatively

underpenetrated categories in FMCG sector, like fairness,

antiseptic and cold cream as well as cool talcum powder.

u Company promotes its products aggressively through

celebrities for brand building. The strategy for growth includes

continuous expansion of distribution network including rural

markets & entering new categories through product innovations

& brand extensions.

u As a policy, Company has invested in market leading

power brands, strengthening their revenues to 72% of turnover

in FY ‘13. It also invested in the Zandu health care division with

the conviction that revenues were incompatible with the brand’s

deep strengths, resulting in to the brand revenue growing by

27% as against 16.9% revenue growth for the Company in FY

‘13.

u Company is well placed for acquisitions since there is no

debt on net basis. It is holding about ` 500 Crs. cash at present.

u The dividend payout ratio works out to 45%.

u Winter brands, which generally contribute 50% of sales

in December quarter, did not do well in Dec. ’13 quarter, due

to shorter winter. Boroplus and Boroplus lotions degrew by

PE Band

Emami Ltd. is also available on www.balance-equity.co.in

TM

Emami Ltd.

BSE SENSEX/S & P NIFTY 21810/6504

Sector FMCG

Market Cap./Free Float (` Crs.) 10016/3004

Market Price as on 14/3/14 `(FV `1/-) 441.3

52 Week High/Low ` 539/380

Equity Shares Outstanding (in Crs.) 22.7

P/E Ratio (Times) (for FY ‘ 13)* 31.3

P/B (Times) (for FY ' 13)* 12.88

EV/EBITDA (Times) (for FY '13)* 28.40

ROE (%) (for FY '13) 41.2

* All ratios on post bonus issue basis - 1:2 June '13

2

Highlights

Shareholding Pattern as on Dec ‘13 (%)

72.74

16.69

2.028.55

Promoters FIIs MFs Others

TM

Emami Ltd.


Background

Emami started in 1974, with its first manufacturing unit in Kolkata. Today it has seven factories spread over five states - West

Bengal, Uttarakhand, Maharashtra, Gujarat & Assam. Company also commenced its first greenfield international unit in

Dhaka, Bangladesh. Research & development units are located in Kolkata and Mumbai

The Company has created a strong portfolio of more than 250 products & 30 brands across the skin care, hair care,

rubificients, ayurvedic medicines and ayurvedic health segments, among others. It has market presence across 60 countries with

subsidiaries in UAE, Bangladesh, Egypt, and the UK. Recently, Company has forayed into the face wash category by launching

Fair and Handsome Instant Fairness Face wash. Emami aims to capture 8% market share of men’s face wash in the next one year.

5% & 6% y-o-y in volumes respectively with 3% value degrowth. Boroplus had a high base of 30% growth in the previous year.

However, Sona Chandi Chyawanprash and Zandu Kesari Jivan grew by 17% and 26% in the quarter. Fair and Handsome grew by

12% (volume 2%), balms by 9% (volume 4%), and Navratna Oil by 6% (volume 1%).

u During the Dec. ‘13 quarter, Company increased its market shares marginally in its key categories. Navratna Oil gained

2% market share and reached 57%. Fair and Handsome gained 4% market share to reach 62%. Boroplus Antiseptic Cream market

share improved to 77% from 76%. Zandu balm lost 1.5% market share. Overall balms’ market share was at 57%. However, domestic

business reported only 1.5% volume growth.

u Modern trade which constitutes about 4.5% of sales grew by 29% in Dec. ’13 quarter, while direct rural business grew by 13%

and urban sales remained almost flat. International business grew by 37%. Canteen stores department sales at ̀ 30.6 Crs. degrew by

14% during Dec. ’13 quarter, against growth of 1.7% during 9 months ended Dec. ’13. This was mainly due to product registration

issues for Chyawanprash.

3

TM

Emami Ltd.


Sales Promotion & Brand build up

Portfolio comprises around 250 products. Strong brand recall is built around power brands Boroplus, Navratna, Zandu Balm &

Mentho Plus Balm and Fair and Handsome, which are market leaders in their respective segments. Sona Chandi Chyawanprash,

Kesari Jivan, Fast Relief, Malai Kesar cold cream and Vasocare petroleum jelly are other prominent brands. Zandu healthcare portfolio

comprises Zandu Pancharista, Vigorex, Rhumasyl, Lalima, Sudarshan, Trifala and Nityam Churna among others.

Company generally spends 16-19% of its revenues on advertising and sales promotions, one of the highest in the industry. In

FY ’13, it spent ` 279 Crs., amounting to 16.4% of sales on A & P. In the last five years it has made over ` 1000 Crs. brand investments.

Generally, it engages celebrities to endorse its products, on both national & regional level, with over 60 celebrities endorsing its

products since early 1970s. In the process, it has created strong brands that have emerged as domestic market leaders, and have

generally outperformed sectoral growth. Introduction of small affordable sachets also aided brand sales and widened the market.

Distribution strength

Company has four regional offices, 32 depots & 33 warehouses with a strong distribution network of 3000 distributors & 5600

sub-distributors with direct reach to over 6 lacs retail outlets, and products available at more than 40 lacs outlets. It has pan

India presence in 28 states and 7 union territories. It has a team of over 2000 front line sales force to support the distribution

efforts. All domestic sales are undertaken on cash basis.

Currently, the Company derives ~52% of domestic revenue from rural markets (~26% of the domestic revenue comes from

direct rural initiatives). Company increased its direct rural revenues by 31% in FY ’13 by capitalizing on strong distribution network.

It increased its direct rural reach, covering more than 8200 villages under ‘Project Swadesh’, which took company’s distribution

4

02468

101214161820

FY '09 FY '10 FY '11 FY '12 FY '13 June '13

Sept. '13

Dec. '13

19.24 19.03 18.48

15.75 16.42

18.85

16.6415.03

Advt. & Promotional Exp. (% to sales)

TM

Emami Ltd.


network down to rural and isolated population clusters of up to 10,000. Modern trade reported 40% revenue growth in FY ’13

and contributed about 3% of total revenue.

Company has an ambitious target of adding further 2 lacs retail outlets by FY ‘15 and increase the share of direct distribution

reach from ~26% to 35% in the next 18 months.

Broplus

Boroplus was launched in 1982. With time, it evolved into a multi-purpose antiseptic solution for all skin problems. Boroplus

presently is the leader in the antiseptic cream segment with 74% market share (FY ’13). The market size is ̀ 466 Crs. Revenues

have grown at CAGR of 16% for 3 years ended FY ’13. Besides India, it is the largest selling antiseptic cream in Russia, Ukraine and

Nepal. Boroplus has diversified its portfolio to Boroplus Advanced Moisturizing Lotion and Boroplus Prickly Heat Powder. Overall,

the brand recorded 32% growth in FY ’13 over previous year.

Antiseptic cream de-grew by 3% during Dec. ’13 quarter. Market share grew by 1% q-o-q to 77.4% during the quarter.

Moisturizing Body lotion grew by 3%. Company launched a new variant of Body Lotion with ingredients like Grapes & Olive Oil.

New Extension BoroPlus Anti Pollution Face wash performed well. Vasocare petroleum Jelly grew by 31% on small base.

Navratna Oil

Emami launched its flagship brand in 1989 amidst unorganized regional players. Against the conventional amla or coconut oil,

Navratna is a therapeutic oil, a unique combination of nine ayurvedic herbs with multiple benefits. Navratna carved out its

own cool oil segment and is the first in this category with a pan India presence. The Company extended its mother brand with the

launch of Navratna Extra, oil with enhanced cooling factors in 2010.

5

COMPLETE HEALTH AND PERSONAL CARE SOLUTIONSkin Care Pain Managemnt Lip Care

Health care and Wellness

Cooling Oil

Boroplus Antiseptic Cream Zandu Balm Vasocare Lip Balm Zandu OTC Navratna Oil

Fair and Handsome Mentho Plus Balm Zandu ethical range Navratna Extra Thanda

Boroplus Advanced Fast Relief Zandu genericMoisturising LotionNavratna Cool TalcBoroplus Ice Cool TalcEmami Malai Kesar Cold CreamVasocare Petroleum Jelly

TM

Emami Ltd.


The revenues have grown at 22% CAGR in last 3 years. The segment registered a growth of 16% in FY ’13 y-o-y, which

enhanced its market share to 55% in the market size of ` 803 Crs.

Cool Oil grew by 6% during Dec. ’13 quarter. It grew its market share by 2% to 57% during the quarter.

Fair & Handsome

Fair and Handsome is the first fairness cream for men in the country. Company has the largest market share of 56% in Men’s

fairness segment, with a market size of ` 330 Crs. Company has lost more than 25% market share in last 3 years, due to stiff

competition. It has grown its revenues by 17% CAGR in last 3 years, and reported a growth of 13% in FY ’13 y-o-y.

Fair and Handsome grew by 12% during Dec. ’13 quarter, and had market share of 62% with a gain of 4% during the

quarter.

Zandu Balm & Mentho Plus Balm

Emami has the largest market share of 58% in Balm category, with a market size of ` 699 Crs. It has grown its revenues in the

category at a CAGR of 20% in last 3 years.

Balm sales have improved 9% in Dec. ’13 quarter over the previous quarter. However, revenue growth was mainly due to

price rise and volume growth was only 4%. Company lost market share in the balm category by about 1.5% during the quarter. It

expects balm category to report 7-8% volume growth going forward.

6

Leading Brands (FY ‘13)Category Market Size

(Rs. Crs.)Revenue

Share (%)Market

Share (%)3 years

CAGRBrand

Position Brands

Cooling Oil 803 20 55 22 1 Navratna Cooling OilBalms 700 22 58 20 1 Zandu & Mentho Plus BalmAnticeptic Cream 360 15 74 16 1 Boroplus Anticeptic CreamMen’s Fairness 330 10 56 17 1 Fair & HandsomCool Talc } } } } 3 Navratna Cool TalcPrickly Heat Powder } 423 } 5 } 18 } 48 Boroplus PowderOintment & Gel 1030 2.7 4 9 5 Fast ReliefAyurvedic Health Supplement

345 2-2.5 10 9 Chyawanprash

Above figures are derived from Company communications

TM

Emami Ltd.


Zandu Balm

Zandu balm is country’s largest selling balm with a market share of 43.2%. It is an ayurvedic remedy for headache, body

ache and cold. It has been trusted household solution for pain relief since 100 years. Since acquisition in 2008, Emami’s

better marketing inputs and distribution strength helped the brand grow at breakneck speed over last few years.

Mentho Plus Balm

Emami entered the balm segment with the launch of Mentho Plus in 1990. The brand recorded strong growth and is

presently the third largest player in the category with a 14.4% market share. It is also one of the biggest LUP players in the

segment, selling around 40 Crs. units in a year. The brand recorded overall growth of 14% in FY ’13 over FY ’12.

Navratna Cool Talc

Emami entered the cool talc segment, a niche segment in the talcum powder category with its flagship product Navratna

Cool Talc in the year 2006. While overall talcum powder category is stagnant, cool talc segment is growing, led by Emami.

Company recorded a stupendous growth of 81% in FY ’13 y-o-y. Emami enjoys third largest 18% market share in the prickly

heat powder and cool talc category, with a market size of ` 423 Crs. It reported 48% CAGR in the last 3 years.

Fast Relief

Company has only 4% share in Ointment and Gel category and has 5th position in ` 1,030 Crs. market. It has grown its

revenues in the category at 9% CAGR in the last 3 years. The brand registered a growth of 9% in FY ’13 over the previous

year.

Other Brands

Vasocare is the second largest brand in the petroleum jelly category. The brand has created a unique offering with the

goodness of herbal elements in traditional petroleum jelly. It registered a growth of 38% in FY ’13. Vasocare has also

entered the lip care segment with Vasocare lip balm and has been promoting the same since FY ’12. Petroleum jelly registered

a growth of 31% in Dec. ’13 quarter.

Although the cold cream category is degrowing, Malai Kesar Cold Cream has been able to hold on to its market share of 5%.

Boroplus Advanced Moisturizing Lotion was launched in 2005 as an ayurvedic lotion. The brand grew at 39% in FY ‘13

and currently enjoys a 6% market share in the winter lotion category.

7

TM

Emami Ltd.


Chyawanprash

Emami Chyawanprash portfolio consists of three variants- Sona Chandi Chyawanprash, Zandu Kesari Jivan and Zandu

Chyawanprash. The Company intends to bring all three products in this category under one common banner of Zandu and

explore new options in this field.

Zandu Kesari Jivan grew by 29% in FY ’13. In Dec. ’13 quarter it grew by 26%. Sona Chandi Chyawanprash grew by 17% in

the quarter. Both chyawanprash category contributed 6-7% of sales in the quarter.

Zandu Health Care Division

Zandu health care division reported significant growth in the OTC and ethical business segment in FY ’13 & the revenues grew

by 27% in FY ’13 y-o-y. The growth was largely driven by the robust growth of Zandu Pancharishta and Lalima, which grew

68% and 60% respectively. Zandu Nityam, an ayurvedic laxative grew by 50% in FY ’13. Zandu Vigorex, an Ayurvedic Energiser,

was launched in June 2012 and has already been quite successful.

Zandu has an enviable portfolio of 139 health solutions for the key health needs. The entire Generic range has been

renewed, with a more contemporary modern outlook. The Ethical range boasts of a host of highly efficacious products with

multiple benefits. The Flagship Brand Rhumasyl, a topical pain reliever for the pain associated with osteoarthritis, rheumatoid

arthritis, musculoskeletal pain, frozen shoulder, spondylitis, lumbago is the undisputed market leader in the ayurvedic topical pain

management category. The entire portfolio grew by an impressive 20% in FY ’13.

Zandu Health Care Division, comprising of OTC, ethical and other generic products, grew by 30.8% in Dec. ’13 quarter.

Pancharishta led the growth with increase of 77% and the new launch Vigorex also performed well.

International Business

The international marketing division was set up in 1992. Over the last two decades, the division has been growing significant

market shares across countries. Internationally, the Company has a strong presence in over 60 countries (SAARC, CIS, South

East Asia, Gulf and Africa). During the last three years exports were relatively flat due to various headwinds in the markets catered

by the Company and discontinuation of certain low margin products.

The international business scenario remained challenging. While the SAARC and GCC (Gulf Cooperation Council) regions

continued to grow, African, Russian and CIS regions remained difficult in FY ’13. Revenue from the international business segment

decreased by 5.4% to ` 180 Crs.

8

TM

Emami Ltd.


Navratna is the highest selling brand in Bangladesh, the UAE and Kingdom of Saudi Arabia in its respective category.

Fair and Handsome is the largest brand in Nepal and UAE in the men’s fairness and men’s face whitening segments respectively.

Boroplus Antiseptic Cream is a leading brand in Russian antiseptic and wound healing space.

Bangladesh plant is operational now, from which the Company expects significant revenue growth, and a possibility

to explore new avenues. Bangladesh constitutes 45% of exports, and is an important market for the Company. With the

commissioning of the plant, Company will save import duty and its products will become competitive. Going ahead, the Company

will focus on the SAARC, GCC, Russia and CIS regions with key brands - Boroplus, Navratna, Fair and Handsome and Zandu.

International business at ` 65.2 Crs. grew by 37.3% during the quarter. Regionwise, GCC grew by 212%, SAARC grew by

17% and Bangladesh degrew by 5%.

9

International Business - FY ‘13 International Business - quarter ended Dec. ‘13

45%

20%

13%

13%

9% SAARC

GCC

CIS

Others

Africa

43%

27%

14%

6%

6%4%

SAARC

GCC

Africa

Others

Australasia

CIS

GCC - Gulf Cooperation Council

SAARC - South Asian Association for Regional Cooperation

TM

Emami Ltd.

Emami Ltd. is also available on www.balance-equity.co.in10

Markets – Rural & Urban

Rural India comprises around 70% of the total Indian population, 40% of the country’s FMCG market and few organized

players. With changing lifestyles and increasing consumer demand, India’s FMCG market is expected to grow to US $ 80

billion by 2016 in towns with population of less than 10 lacs [Source: Dinodia Research]. Rural spending was significantly higher

at ` 3, 75, 000 Crs. than urban consumption levels which stood at ` 2,99, 400 Crs. between FY ’10 & FY ’12. Rural consumption

per person outpaced that of its urban counterpart by 2% (Source: National Sample Survey Organization).

About 30% of India is urban, accounting for about 11% of the world’s urban population. India’s urban population is

projected to be 60 Crs. in the next few years and an estimated 70 Crs. by 2030, growing the market for FMCG companies in India.

[Source: IBEF]

India’s FMCG penetration is low compared to other countries, and its rural penetration even lower than urban, even

as the rural population is higher, resulting in a large untapped FMCG potential. Government’s agricultural support will drive

long-term consumption growth and as a result, the FMCG industry is expected to report 18% growth annually over the next few

years. It is expected that this sector will grow to a projected US $ 33 billion by 2015 and US $ 100 billion by 2025, emerging as

the biggest consumer expenditure component by the end of the Twelfth Five Year Plan (source: ASSOCHAM).

Raw materials

Menthol, Light Liquid Paraffin(LLP) and Polypropylene are the 3 major raw materials for Emami.LLP being petroleum

based, tracks crude oil prices. Other raw material includes camphor, waxes, mercury and metals like Gold & Silver.

Raw material continued to be one of the key areas of concern as prices of principal raw materials remained volatile

during FY ’13. These materials include menthol, LLP, zinc oxide and others including packaging materials. To control raw material

costs, Company undertakes bulk purchases, and procures materials during lean season between July and September. It is also

planning to manufacture mentha as backward integration. Materials are procured from multiple vendors and from tax exempt

zones in North East India & Uttarakhand to save costs. Company also tried to diversify product mix by utilizing vegetable oil

without impacting quality. It has also tried imports of key ingredients like microcrystalline wax, methyl salicylates, soap

noodles, paraffin waxes, ozokerite wax etc.

TM

Emami Ltd.

Emami Ltd. is also available on www.balance-equity.co.in11

FinancialsFY ‘13

Standalone revenues grew 17.1% to ` 1,627 Crs. PAT increased 26.1% to ` 324 Crs., despite surge in key input costs.

Consolidated turnover increased 16.9% to ` 1699 Crs., while consolidated EBITDA and PAT increased by 17% & 21.6% to

` 347 Crs. & ` 315 Crs. respectively y-o-y.

All power brands – Boroplus, Zandu Balm & Mentho Plus Balm, Navratna and Fair & Handsome - increased market

shares in FY ’13. Company’s international business was marginally down due to lower off take in the CIS, Russian and flat

African markets coupled with inventory correction among distributors.

Domestic business is on a cash-and-carry basis, resulting in a strong overall receivables cycle of 24 days of turnover

equivalent. Payable cycle was 22 days as of March ’13.

Subsidiary performance for FY ‘13Name of

Subsidiary/Details

` In Lacs

Emami

UK Ltd

Emami

Bangladesh

Ltd

Emami

International

FZE

Emami

Overseas

FZE

Pharma Derm

S A E Co,

Egypt

Stake (%) 100 100 100 100 90.59

Capital 28.91 27.82 18.98 3.08 167.2

Reserves 11.54 222.86 171.46 -321.72 -117.55

Total Assests 82.78 1747.57 8719.18 992.6 452.6

Total Liabilities 42.33 1496.88 8528.74 1311.24 402.95

Turnover 142.61 5493.68 7578.15 NIL NIL

Profit/(Loss) after Tax 0.19 0.01 -8.01 -0.88 -0.53

The above profit/loss has not been dealt with in holding company accounts.

TM

Emami Ltd.


12

9 mths ended Dec. ‘13

Revenues went up by 10.2% y-o-y to `1,375.06 Crs. EBITDA went up by 30.7% to ` 323.32 Crs., while net profit went up by

32% to ` 287.38 Crs. Company reported 10% value growth and 5% volume growth. Cost of goods sold stood at 37.2%,

reduction of 3.6% y-o-y, on account of reduction in input prices and selective price increases. Staff costs at ` 106.5 Crs. increased

from 7% in the last year to 7.7% of sales. Advertisement and promotional expenses, stood at ` 227.9 Crs. and decreased by 1.8%

to 16.6% of sales. Other expenses at ` 205.6 Crs., increased by 1% at 15% of sales. Forex gain amounted to ` 3.9 Crs. against loss

of ` 5.04 Crs. last year.

Dec. ’13 quarter

Dec. ’13 quarter revenues went up by 6.6% to ` 584.67 Crs., while EBITDA went up by 29.1% to ` 176.78 Crs. y-o-y. Net

profit for the quarter went up by 31.1% to `151.22 Crs. y-o-y. Delayed and erratic winter has affected off takes in domestic

market in this quarter. It grew by 5% in value terms with 1.5% volume growth. Value growth has been flat for winter brands,

which contributes to almost 50% of the revenue in Dec. quarter. Rest of the brands grew by 10% in the quarter with volume

growth of 5%.

However, easing of input prices and judicious price hikes have helped improve the margins and report higher profits.

Staff cost and other expenses, however, increased by 40 bps (basis points) and 100 bps y-o-y respectively, whereas advertisement

expenses decreased by 360 basis points in this quarter. Company expects to maintain margins at gross level as it expects menthol

prices to remain stable.

In Dec. ’13 quarter, International business grew by 37.3%, and was led by GCC and SAARC. CIS continued to degrow and

Africa was more or less flat. Bangladesh is an important market for the Company and it degrew by 4% in Dec. ’13 quarter due

to elections and Company hopes to do well now post elections. Other markets have done very well like Nepal, Sri Lanka etc.

Capex

Company is scaling up its production capacity in Assam by setting up a new manufacturing unit at a cost of ` 65-70 Crs.

Majority of expense will be undertaken in FY ’15 and the plant will be ready for commissioning in FY ’16. Company plans to

spend ` 160-180 Crs. on capex in FY ’14 and FY ’15 including maintenance expenditure.

TM

Emami Ltd.


13

u In spite of not so normal summer and winter season in FY ’14, which saw volume degrowth in brands like Boroplus,

Company has gained market shares in all its key categories except Balms, where it effected price increase, which was not followed

by competitors.

u Emami derives its growth from three pronged strategy – ayurvedic pedigree, significant investment in brand building and

reaching out to new demographic groups - to reach consumers across economic segments, geographies, markets and formats.

u The historically low FMCG penetration is correcting especially in rural India with consumer aspirations rising and incomes

growing. We expect the industry to grow robustly over the next five years, accounting for a larger share of consumer spending.

u Advertisement expenses amounted to 16.6% of sales in first nine months of FY ’14. Company expects it to remain in the range

of 15.5-16% for full year FY ’14. It plans to get aggressive with new launches and ad expenses in the next year. Ad expenses may rise

to 18% of sales in FY ’15.

u Company is expecting 15% growth of revenues and net profit for FY ’15, with new launches and some price increases. Out of

this volume growth can be minimum 10% including new launches. New launches itself will contribute about 3-3.5% to the revenue

growth. Revenue growth is more dependent on normal seasons in the country, as compared to any other factor. However, net

margin as a % of sales may not expand due to ad spend increase, some raw material price increases and not so exciting demand

environment. Company plans to increase its market share in power brands by about 2-3%.

u International business which is expected to grow by more than 25% in FY ’14, is expected to see growth of more than 20% in

next 2-3 years.

u For next five years Company expects revenues to grow in the range of 15-17%, where Zandu products will take a lead.

u Company has been reporting robust ROE as a result of lower networth, due to write off of goodwill from general reserve to

the extent of ` 102.09 Crs. every year, since FY ’10. Company had outstanding amount of only ` 60.98 Crs. as goodwill, as of March

’13. We expect company to report ROE of about 40% in FY ’14. The stock has been trading between 25-29 x forward P/E during last

3 years. At present it is available at about 25-26 x P/E on FY ‘14E earnings, on post bonus issue capital.

Comments

TM

Emami Ltd.


14

Consolidated Financial ResultsPeriod Ended (` Crs.) FY '10 FY '11 FY '12 FY '13 June '13 Sept. '13 Dec. '13

Turnover 1037.99 1247.07 1453.51 1699.1 383.65 406.74 584.67(Inc)/Dec in stock -0.92 -28.48 22.17 -6.52 14.88 -13.59 13.38Raw Materials 251.9 346.76 415.12 539.83 95.73 133.43 164.39Purchase of traded goods 129.55 204.9 189.14 182.14 47.14 29.71 26.75Staff Cost 57.92 72.87 92.31 115.55 34.05 36.76 35.65Advt. & Sales promotion 194.42 219.41 228.99 279 72.33 67.7 87.85Other Expenditure 159.72 178.17 209.02 241.82 60.31 65.4 79.87Total Expenditure 792.59 993.63 1156.75 1351.82 324.44 319.41 407.89EBITDA 245.4 253.44 296.76 347.28 59.21 87.33 176.78EBITDA Margin (%) 23.6 20.3 20.4 20.4 15.4 21.5 30.2

Depreciation 15.43 14 18.8 21.98 5.65 5.89 6.15Interest 20.97 15.23 15.21 6.57 1.17 1.39 1.22Tax 35.21 40.41 40.12 54 9.54 18.31 30.39Other Income 8.07 33.1 54.12 55.68 15.12 16.43 12.2Foreign Exch loss/(gain) -1.06 -11.81 17.94 5.73 -2.7 -1.78 0.54Exc. Items -2.22 1.42 -1.12 0.12

Net Profit 179.64 218.32 275.63 320.53 57.97 78.17 151.22Minority Interest 0 0.01 0.03 0.06 0.01 0.01 0Net Profit 179.64 218.33 275.66 320.59 57.98 78.18 151.22

Net Profit Margin (%) 17.3 17.5 19.0 18.9 15.1 19.2 25.9

Equity Capital (FV ` 1/-) 15.13 15.13 15.13 15.13 22.7 22.7 22.7

Equity Shares (in Crs.) 15.13 15.13 15.13 15.13 22.7 22.7 22.7Reserves 610.29 674.72 691.5 762.34 866.92EPS (`) 11.87 14.43 18.22 21.19 2.55 3.44 6.66Book Value (`) 41.3 45.6 46.7 51.4 39.2ROE(%) 28.7 31.6 39.0 41.2 8.8Net Profit after Forex (Gain)/Loss 180.7 230.14 257.72 314.86 60.68 79.96 150.68Net profit Margin (%) 17.41 18.45 17.73 18.53 15.82 19.66 25.77EPS (`) after Forex (Gain)/Loss 11.94 15.21 17.03 20.81 2.67 3.52 6.64Note:1) Company is writing off goodwill amount in P & L through transfer from general reserves. Dep. & amortisation amount shown is net of transfer from general reserves of ` 102.09 Crs. per annum.2) Reserves has been increasing at a slower pace because of transfer from general reserves for goodwill write off. This has resulted in higher ROE.3) Bouns issue in the ratio of 1:2 alloted on 27/6/13. EPS & Book Value after that date on increased capital.

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