Turnover at Rs 246.89 crore was up 8.86 per cent compared to Rs 226.79 crore last year, aided by a volume led growth in all its product categories, except Saffola - where sales were restricted due to raw material constraint. However, brands like Parachute, Sweekar, Hair & Care and Sil have performed well. It would be prudent here to point out that all these brands are amongst the top two in their respective segments.

Furthermore, increasing exports to the Middle East and SAARC countries have also helped. The dropsy scare also resulted in an increase in the refined oils consumer packs category which grew by 11.2 per cent in volume and 35 per cent in value.

But despite this volume growth, fluctuating raw material prices and increased ad-spend on brand awareness, given the entry of Levers into the hair care segment, havetaken a toll on margins. In fact operating margins have actually dropped from 11.33 per cent to 11.05 per cent.

The drop in margins notwithstanding, the bottomline growth of 18.63 per cent from Rs 17.19 crore to Rs 20.4 crore is commendable. The boost to the net profit is largely due to a lower interest burden and a lower effective tax rate. The interest burden has dipped 41.62 per cent to Rs 1.69 crore, mainly due to a fresh infusion of funds worth Rs 17.5 crore by an offer for sale from the promoters at a premium of Rs 165 per share.

With these funds, the company repaid term loans to the tune of Rs 11.25 crore, bringing total borrowings down Rs 18.71 crore in March 1997. A reduction in the company's effective tax rate from 20.93 per cent to 14.72 per cent, has also helped buoy earnings.

Thus for the future, intense competition in the hair and cooking oil segments from multinationals and the consequent higher promotional expenditure, could continue to put pressure on margins. However the capacityexpansion at Goa and product extensions in the form of mustard oil in north India and cottonseed oil in south India bode well.

Marico would also do well to realise the untapped potential of the rural regions. A wider distribution network in this direction would definitely help bring about further volume growth.