Marico Q2 Volume Growth Amidst GST Disruption

New Delhi, Oct 6 (PTI) Marico's domestic business logged a volume growth of high single digit in the second quarter of the current fiscal, despite facing a transitory impact from the disruption created by the implementation of new GST slabs.

However, Marico "expects modest operating profit growth on a year-on-year basis" as it extended discounts on the pipeline inventory to its channel partners during the two weeks leading up to the effective date of the GST rate changes and high commodity prices, the company said in its latest quarter updates.

The government announced the Next-Generation (GST 2.0) reforms on September 4, lowering tax on most daily essentials, including food and personal care products, which took effect from September 22.

The GST rationalisation has benefited 30 per cent of its India business, which will stimulate demand and help in long-term growth in the FMCG sector, said Marico.

"In line with the intent of the government's measures, we have passed on the benefits of revised GST rates to consumers across relevant product categories, reinforcing affordability and accessibility," said Marico, which owns brands as Saffola, Parachute, Hair & Care, Nihar and Livon etc.

During the quarter, the India business continued to exhibit steady momentum through July and August, while having to absorb the transitory impact of disruption in trade channels and purchases by the Canteen Stores Department ahead of the implementation of new GST rates in September.

"Despite the same, underlying volume growth in the India business remained in high single digits, albeit moderating sequentially," it said.

According to Marico, the sector witnessed 'stable demand trends' during most of the quarter.

"We expect sentiment to gradually improve during the upcoming festive season and months ahead, aided by easing inflation, above-average monsoons, healthy crop outlook and policy stimulus," it said.

In the September quarter, its Parachute business recorded 'low single digit' decline in volumes amidst 'unprecedented hyperinflationary input cost' and pricing conditions.

"After normalising for ml-age (grammage) reductions in lieu of price increases, the brand was flattish in volume terms during the quarter," it said.

Saffola Oils delivered flattish volumes with a high base and revenue growth in the high teens, while its Value Added Hair Oils business delivered high teens growth, reflecting a sustained recovery path.

"We expect the franchise to maintain a healthy growth momentum over the near and medium term, supported by the strategic focus in the mid and premium segments of the portfolio, enhanced direct reach driven by Project SETU and the recent GST rate rationalisation," said Marico.

Its Foods and Premium Personal Care, including its digital-first brands as Beardo, Just Herbs, healthy foods brand True Elements and Plix - maintained the accelerated scale up.

Similarly, Marico's International business maintained "robust momentum" with constant currency growth touching the twenties.

"Bangladesh and MENA businesses visibly outperformed, while other markets were steady in their course," it said.

Over the commodity prices, Marico said among key inputs, copra prices remained rangebound after correcting 10-12 per cent, while vegetable oil prices sustained high levels. Moreover crude oil derivatives were benign.

Owing to this "gross margin is expected to come under incremental pressure, on a relatively high base and partly due to the pricing-led high denominator effect. We expect gross margin pressures to ease in the second half of the year."

Despite the input cost push, Marico continued its investments on brand-building aiming long-term equity and drive accelerated portfolio diversification.

"In addition, we also extended discounts on the pipeline inventory to our channel partners during the two weeks leading up to the effective date of the GST rate changes," said Marico adding " In the given context, we expect modest operating profit growth on a year-on-year basis."

Over the outlook, Marico has maintained its aspiration of delivering sustainable and profitable volume-led growth over the medium term.

Marico Q2 updates provide an overall summary of the operating performance and demand trends witnessed during the quarter ended September 2025.

"A detailed Information Update will follow this once the Board approves the financial results for Q2 FY26," it said.