Parachute coconut oil growth has been very good in the first quarter of this fiscal, says Vivek Karve, chief financial officer, Marico Ltd. During an interview with Abhishek Satya Vratam, Karve said the copra prices decline has been passed on to consumers in a tactical way.

Copra prices have fallen over 20%. Did it have any impact on your volume and will you pass on its benefit to the consumers?

If you see our overall growth, then the growth of Parachute coconut oil is very good. In terms of volume, parachute coconut oil has grown by 9%. We have passed on its benefits of copra price drop to the consumers in a tactical manner. Besides, we also had a focus on direct distribution and rural areas, which helped us in increasing parachute growth by 9%. But other coconut oil brands such as Nihar,

Oil of Malabar – termed as price warrior brands – have declined under the deflationary environment. But the focused portfolio of Parachute Rigid bottles has grown by 9%. However, copra prices are likely to increase in Q3 and Q4 from the current levels, but we will continue to play tactically under this deflationary environment to benefit the consumers. Our gross margin has grown about 500 basis points, therefore, our Ebitda growth is also very healthy at 26%.

Your margins, as well as Ebitda, have improved and raw material costs have been favourable. What is your outlook?

Raw material prices in the current quarter have gone down by almost 25% as compared to the same period of the last year. It has contributed to the rise in our gross margin and also translated into Ebitda growth. If you have a look at Bangladesh's profitability, then raw material prices have also gone down there as well, making our gross margin and Ebitda margins healthy. Going forward, in terms of consolidated business, we will be able to post a 20%+ Ebitda margin for the rest of the year.

Your volume growth came in at 6% in the June quarter. What are your future projections, and will good monsoon have any positive impact on domestic volumes?

Economic growth momentum is very slow in India at present and in its backdrop, our mid-term growth plan - volume-wise - stands between 8% and 10%. But having an eye on overall macro scenarios, I think that our Indian business will be able to grow by 6-8% in product volumes. As far as international business is concerned, there is double-digit constant currency growth because the foreign exchange keeps moving up and down, and that's why it typically reports constant currency growth. And, we expect we will be able to post a double-digit constant currency growth for the rest of the year.

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