The Hindu Business Line : Glaxo achieves zero debt status — Fourth quarter profit declines 33 pc

A MASSIVE re-engineering exercise undertaken by nutritional healthcare major GlaxoSmithKline Consumer Healthcare Ltd (GSKCH) to revamp its cost structure has begun to bear fruit. The company has reported a considerable improvement in its working capital utilisation and achieved zero debt status

From a Crocin to Horlicks or Iodex and Eno to Boost or Aquafresh - GSKCH's product portfolio is as diverse as chalk and cheese. However, the company points out that despite the recessionary trends in various sectors of the economy, including FMCG and manufacturing, GSKCH has maintained its overall market share in the industry.

Its flagship brand, Horlicks, has maintained its market share and Junior Horlicks is doing exceedingly well in the South as well as East, the company said in its communiqué here today, after it declared its annual results for the calendar year 2002.

Boost, the beverage brand endorsed by cricket's demi-gods Kapil Dev and Sachin Tendulkar, was re-launched in November 2002 with a new formulation. In two months after its re-launch, the brand's share has gone up from 11.3 per cent to 14.2 per cent in December 2002, the note said.

According to Mr Nicholas J. Massey, Managing Director, GSKCH: "As part of the overall consolidation strategy, the company last year focused on increasing its capacities and commissioned the Sonepat plant. We have also substantially improved our operational efficiency by bringing overheads and administrative costs under control." He further added that the company would now focus on growing the market and driving consumption and detailed plans are in place for the Health Food Drinks (HFD) market.

Meanwhile, the company's net profit dipped by 32.9 per cent to Rs 85.01 crore, as against Rs 126.63 crore in 2001.The turnover for the year also showed a dip of 12.3 per cent as against 2001. However, the sales for Q4 2002 are not comparable with sales figures of Q4 2001, when there was an inventory build-up at the trade level. With inventories in 2002 aligned to the pattern of consumption in a sluggish market, the present sales reflect a substantial reduction as compared to 2001, the company pointed out.

GSKCH has repaid the entire debt used to fund its plant at Sonepat, Haryana ahead of its plan. The new plant at Sonepat has been designed to produce high-quality Horlicks formulation. To further consolidate its leadership position in chosen segments, the company increased its advertising spends by 18 per cent over the previous year. And this support to promote its brands would continue through this year, the company informed.

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