Consumer durable major Marico notes that pressures on margins will improve towards the second half of FY23. In their annual report released on Thursday, the company said given that crude and edible oil inflation is supply-led, some cooling off can be expected in the next few months.

“Therefore, we expect demand and margin trends to improve towards the second half of next year. In view of these factors, consolidated operating margin should be in the range of 18-19 per cent in FY23.”

Strengthening brands

Saugata Gupta, MD & CEO, Marico, noted, “As the year progressed, the impact of the pandemic on public health in India reduced and mobility levels picked up. However, since then, multi-year high inflation and the unleashing of pent-up demand in discretionary and out-of-home categories have resulted in consumers allocating a lower share of wallet to FMCG.”

Under these circumstances, the company single-mindedly focused on strengthening the equity of its brands and executing smartly, Gupta said. The core portfolios of Parachute coconut oil, Saffola edible oils and value-added hair oils held steady against this backdrop, and given that the market construct and growth drivers of these categories remain intact, Marico expects these to grow in line with the stated medium-term aspiration.

In line with the surging global inflationary pressure, the company has flagged unexpected changes in commodity prices as a risk factor which could impact the business margins. Other economic factors that could pose financial risk to the company also include foreign currency exposure of the company.

Future growth avenues

“We will focus on continuing the good work on driving sustainable and profitable growth in the core, managing costs aggressively and staying true to our purpose in our ESG commitments. However, to unlock the next leg of growth, we need to drive the four Ds — diversification, distribution, digital and diversity — to deliver long-term profitable growth,” the report added.

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