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Hemas FMCG (Fast Moving Consumer Goods) Sector is primarily
engaged in the manufacture, marketing and distribution of Personal
Care, Personal Wash, Household and Food products. Whilst Sector
revenues are dominated by the Personal Care category, for which
Hemas has the second largest market share in the country, we have
been gradually increasing our exposure to the wider FMCG
industry by entering new categories.
The financial year under review began on a cautious note as the
market growth was threatened by unfavorable economic conditions
which prevailed at the time. However, over the year, as
macroeconomic conditions began to improve, especially with
declining inflation and a stable rupee, consumer demand picked up
resulting in a healthy market growth. Most of our brands
outperformed their competitors as they managed to increase their
market shares in the respective categories.
For the year under review, the Sector posted a turnover of Rs
3,192Mn, a growth of 10.2%. Sector profits were Rs 393Mn,
reflecting a growth of 11.8%. Profit growth was impacted by the
increased taxation due to 50% of the advertising spend being
disallowed for tax purposes.
Our flagship brand, Baby Cheramy, which was re-launched two
years ago, has achieved remarkable success in terms of market
performance and profitability. Over the last year, Baby Cheramy
was able to grow its market share considerably, and the fact that
this was achieved in the midst of competing international brandsdemonstrates the strong brand equity associated with Baby
Cheramy. In the Oral Care category, Clogard continues to maintain
its market share as the largest 'local brand', in the presence of severe
competition coming from both local and international players.
s e c t o r o p e r a t i o n a l r e v i ew
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During the year under review, the entire range of Goya perfumes
was re-launched and the results have been impressive in terms of
top-line performance. The new look and packaging are more in line
with the other international brands that dominate this category. In
the Hair Oil category, Kumarika Hair Oil has emerged as the
market leader subsequent to its re-launch two years ago. We
entered the Adult Soap category in February last year with the
brand Velvet and thus far the Sector has been enjoying satisfactory
results with this new brand.
The year under review has seen significant moves by Hemas to
enter new categories such as snack foods and paper. Foods &
homecare categories have grown to a size that justifies dedicated
resources in order to provide greater focus. In view of this, we
established a new division for foods & homecare during last year.
The launch of Rockers potato chips and the subsequent brand
acquisition of Mr Pop is an excellent platform for Hemas to grow
in the snack foods category. We are currently in the process of
widening our presence in the foods category by entering the
confectionery (boiled sweets) market. In the paper category Hemas
made its entry at the beginning of the financial year by acquiring
the brand Nimex and the fixed assets of Nimesha Enterprises. To-
date the brand has been performing in line with initial expectations.
One of the key focus areas for the coming year is the expansion of
international business. In view of this, a separate division for
International Business is now being formed, and we are currently
in the process of allocating the required resources for the division.
With the positive signs we have seen with some of our products in
the Southeast Asian markets, we are confident that this is an area
with good prospects. Another key initiative by the Sector is to take
advantage of incentives offered by the Government for business
activities outside the Western Province. With this in mind, we are
planning to relocate our factory to the neighboring Northwestern
Province. This move, whilst enabling us to streamline production
and upgrade the process, will entitle the company for a 5-year tax
holiday and preferential rates thereafter.
Long-term growth of the FMCG industry is highly correlated with
the general economic conditions of the country. Looking ahead
over the medium-term future, we are confident that the Sector has
good prospects.
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