Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Gillette: 'Shaving' focus pays - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Oct 29, 2002

    Gillette: 'Shaving' focus pays

    Shaving products major, Gillette India, has reported YoY 13% decline in net sales during the September quarter. However, the company has reported a significant improvement in bottomline. Gillette India finished 3QFY03 with Rs 81 m net profit, as compared to Rs 36 m net loss during 3QFY02.

    (Rs m) 3QFY02 3QFY03 Change 9mFY02 9mFY03 Change
    Net Sales 1,224 1,068 -12.8% 3,326 2,891 -13.1%
    Other Income 71 9 -87.4% 102 57 -43.9%
    Expenditure 1,215 889 -26.8% 3,110 2,566 -17.5%
    Operating Profit (EBDIT) 9 179 1820.4% 216 325 50.6%
    Operating Profit Margin (%) 0.8% 16.7%   6.5% 11.2%  
    Interest 34 11 -68.7% 92 39 -57.9%
    Depreciation 72 47 -34.2% 219 149 -32.1%
    Profit before Tax -25 130 - 7 195 2533.8%
    Tax -20 49 - -16 97 -698.1%
    Extraordinary items -30 0 - -30 0 -
    Profit after Tax/(Loss) -36 81 - -6 98 -
    Net profit margin (%) -2.9% 7.6%   -0.2% 3.4%  
    No. of Shares (eoy) (m) 32.6 32.6   32.6 32.6  
    Diluted Earnings per share* -4.4 9.9   -0.3 4.0  
    P/E ratio   30.6     75.8  

    The results for the quarter and nine months are not comparable due to discontinuation of manufacturing operations at Duracell Manesar plant at the beginning of the year. Consequently, the export sale of batteries for the nine months of FY03 at Rs 12 m was significantly lower as compared to Rs 439 m in the corresponding period. However, on a like to like basis, sales for Gillette India grew by 3% YoY from Rs 3,101 m in 9mFY02 to Rs 3,193 m in 9mFY03.

    The company has been in the throes of restructuring recently. The company decided to sell Duracell India plant to Duracell Belgium for a consideration of US$ 6.5 m. It closed the Duracell plant at Manesar and consequently took a hit of Rs 606 m for its closure. This component was largely the reason for Gillette India ending FY02 in red. Another major positive for the company is the capital grant of Rs 850 m (US$ 17.5 m) from its parent. The monies realised were to be used to retire debts and strive to make Gillette a zero debt company.

    Cost break-up
    (Rs m) 3QFY02 3QFY03 Change 9mFY02 9mFY03 Change
    Raw material 675 446 -33.9% 1,730 1,344 -22.3%
    Staff 96 89 -7.4% 268 264 -1.3%
    Others 444 354 -20.3% 1,112 958 -13.9%
    Total expenditure 1,215 889 -26.8% 3,110 2,566 -17.5%
    * Others includes Rs 89 m as advertisement & sales promotion exp. in 3QFY03

    Going by the decline in the company's interest burden, one can assum that the grant has been used to retire debts. Due to the exit from Duracell plant, the depreciation provisioning is also lower. The company's operating margins have improved to nearly 17% during 3QFY03 (up from 12% in 2QFY03). These are all signs that Gillette India is on the road to recovery.

    Enthused by the results the stock has gained ground recently. At the current price of Rs 304 the stock is trading at 30.6x 9mFY03 annualised earnings. However, this parameter for valuation is not suitable for a company on the turnaround road. The market cap to sales stands at 2.6x 9mFY03 annualised sales. Going forward Gillette's operating performance should be even better. Also with Gillette India looking to hiving off its Geep Battery business the future looks even better for the company.



    Equitymaster requests your view! Post a comment on "Gillette: 'Shaving' focus pays". Click here!


    More Views on News

    Marico: Earnings Hit by Lower Volumes and Firming Input Prices (Quarterly Results Update - Detailed)

    Aug 9, 2017

    While GST implementation brought down volumes and profitability in the short run, Marico remains optimistic in the long run.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 18, 2017 (Close)


    • Track your investment in GILLETTE INDIA with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks



    Detailed Financial Information With Charts