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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.

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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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