“With the prices of key raw materials increasing, FMCG companies registered a 16.2 per cent rise in their cost of raw materials in three months ending March,” the Assocham Eco Pulse (AEP) said. The annual rate of inflation touched a 42-month high of 7.83 per cent for the week ended May 3.
FMCG majors Godrej and Marico registered a decline of 0.88 per cent and 8.28 per cent in their total income on sequential quarter basis, while Hindustan Unilever and Dabur managed to post a 15.72 per cent and 16.47 per cent increase respectively.

Volume growth
“The sector witnessed a decline of 15.38 per cent in their net profits putting pressures on their volume growth, which grew by only 5.76 per cent in fourth quarter of 2007-08,” Assocham President Venugopal N Dhoot said.

The big dampener has been rising costs of key inputs wheat and milk, a rise that shows no sign of abatement.

Wheat price rose 0.38 per cent in third quarter and 1.13 per cent in fourth quarter last fiscal. Milk price rose 8.84 per cent in third quarter and 9.13 per cent in fourth quarter. Fuel and power cost rose 0.65 per cent in third quarter and 5.06 per cent in fourth quarter.

“Despite a 15.7 per cent growth in its total income, Hindustan Unilever reported a decline of 39.41 per cent in its net profit after tax in the fourth quarter as compared to Q3 of 2007-08,” Mr Dhoot pointed out.