JYOTHYLABNSE27 May 2022

Jyothy Labs Limited

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Key numbers — 23 extracted

15.1%

he last four quarters reporting double digit growth and we have closed the full financial year at 15.1% topline growth. In fact this is the first time as net sales value we have crossed Rs.2000 Crores

Rs.2000 Crore

l year at 15.1% topline growth. In fact this is the first time as net sales value we have crossed Rs.2000 Crores topline sales and exact at Rs.2196 Crores, so we are happy to report this milestone in the life

Rs.2196 Crore

is is the first time as net sales value we have crossed Rs.2000 Crores topline sales and exact at Rs.2196 Crores, so we are happy to report this milestone in the life of Jyothy Labs. This has been achieved on

13.3%

f our growing market share across all categories and if you look at the two-year CAGR we are at 13.3%. As we move along our journey is to build further scale from here on, strengthen our distribution

40%

there is a marginal decline in the rural growth what we had seen in the past, but as Jyothy Labs 40% of our sales comes from rural and we will continue to focus on rural growth, we have been adding

30%

nvestments in spite of being a challenging year we have been able to increase our media spends by 30% on year-on-year basis, so we will continue to do that, we want to reach out to a larger consumer

14%

re facts, as Jyothy the input prices which have been rising have impacted our overall products by 14%. we have mitigated, we have taken price increases over the last one year to the tune of 6 to7% an

y 14%. we have mitigated, we have taken price increases over the last one year to the tune of 6 to7% and the balance has impacted our margins which is what you see a 5-6% decline in our GMs and whic

one year to the tune of 6 to7% and the balance has impacted our margins which is what you see a 5-6% decline in our GMs and which has been flown down to our EBITDA margins. As we move along we are c

18%

ontribute to be another third of our business. Fabric care is doing well, this quarter we grew by 18% and for the full year we have grown by 22%. The unique thing in fabric care is that we are witnes

22%

. Fabric care is doing well, this quarter we grew by 18% and for the full year we have grown by 22%. The unique thing in fabric care is that we are witnessing is large packs across all channels are

35%

ing well especially in the e-com and modern trade. Our e-com business has been growing by good 30-35% every year and also with the opening up of the institutions and work places the past challenges w

Guidance — 20 items

Sanjay Agarwal

opening

“We will be discussing our performance for this quarter, which is March quarter and for the full year ended March 31, 2022 with all of you and we will follow it by the Q&A.”

Sanjay Agarwal

opening

“This has been achieved on back of our growing market share across all categories and if you look at the two-year CAGR we are at 13.3%.”

Sanjay Agarwal

opening

“We launched new products in certain adjacencies like liquid detergent in both Ujala and Henko Matic, so overall our target is to maintain a healthy balance between higher volume growth, our aspirational market share and margins.”

Sanjay Agarwal

opening

“Overall we see immense potential for our products and we will be focusing on increasing the distribution, increasing the brand investments in spite of being a challenging year we have been able to increase our media spends by 30% on year-on-year basis, so we will continue to do that, we want to reach out to a larger consumer base, gain market share and also strengthen our position in sales or geographies where we have a lot of potential to gain further market share.”

Sanjay Agarwal

opening

“So these are about the four categories in which we operate and the way forward for us we will be continuing to focus on volume led growth.”

Sanjay Agarwal

opening

“We know margin challenges will be there in spite of that we would like to focus on higher brand building activities, invest in technology, and make our distribution or direct distribution much stronger, we will continue to add manpower on the ground to further strengthen our rural expansion.”

Sanjay Agarwal

opening

“We know that we will be facing inflationary input prices, and this may impact the demand, but as we speak the expectations of good monsoon are there.”

Sanjay Agarwal

opening

“We believe that the next year which is ahead of us FY2022 – 2023 we should deliver on the same growth trajectory of double digit.”

Sanjay Agarwal

“Going forward we will increase the prices but as of now April-May we have been just on a wait and watch.”

Abhijeet Kundu

“My first question was on fabric wash, for the year you have recorded about 22% growth how much of this is volume, how much of this is price hike, just wanted to take understanding of how much of it will be spilled over impact to next year, so there have been price hikes, but we believe that a good amount of those price hikes came in the second half?”

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Risks & concerns — 10 flagged

We all know the input prices are rising and it is a matter of concern for us, for the industry, for the consumer, nobody is happy neither producer is happy, neither consumer is happy with higher prices but that is the reality of life.

— Sanjay Agarwal

We have taken price increases, we have done grammage reductions, we have done as much as cost rationalization measures we can take, and we continue to track the rising input prices, but in spite of all these challenges we have been able to do this growth and the key impact of higher input prices obviously leads into increase in retail prices of our products which impacts the consumer purchasing power.

— Sanjay Agarwal

If we look at the urban and the rural side both are doing well, there is a marginal decline in the rural growth what we had seen in the past, but as Jyothy Labs 40% of our sales comes from rural and we will continue to focus on rural growth, we have been adding rural stockist, very unique methods to reach out to the rural India through the help of van operations, mopeds, adding more sales team on the ground which is giving us lot of competitive advantage as we move along.

— Sanjay Agarwal

we have mitigated, we have taken price increases over the last one year to the tune of 6 to7% and the balance has impacted our margins which is what you see a 5-6% decline in our GMs and which has been flown down to our EBITDA margins.

— Sanjay Agarwal

We will further focus on product mix and SKU rationalization which can offset some more cost pressure.

— Sanjay Agarwal

There is a decline but if you look at it on a two-year basis we have grown by 11%.

— Sanjay Agarwal

The benefit of which should be seen on the gross margins, year-on-year still there would be pressure on gross margins but at least in Q1 and Q2 you would be relatively better, when we look at the overall scenario ideally there should be some amount of support on the gross margin part, gross margins ideally should not deteriorate from here should see some amount of marginal upside even if assuming that raw material prices are increasing at similar levels?

— Abhijeet Kudu

Also there is an impact of the mix we will take all measures whatever it takes to get back to the earlier margins, but it may take some time depending on how the overall environment behaves.

— Sanjay Agarwal

Great Sir and just another question if I may squeeze in, any comments on the demand scenario, so we know that there is pressure on the demand, but on the other side there is also agriculture inflation and any green shoots we are seeing on that regard?

— Sameer Gupta

We have gained on Exo, yes Pril there is a small loss there but while internal sales has been growing in double digits, so really difficult to say why is that reflecting that way there, our internal sales have registered double digit growth.

— M. R. Jyothy

Q&A — 10 exchanges

Thanks for the opportunity. Sanjay Sir, I guess the number which you said in terms of input inflation which was 14% versus the price increase of 6 to 7% I assume these numbers would be factoring in the inflation till fourth quarter and Q1 has kind of incremental inflation for most of the commodities, so if you could help with the direction on let us say the price increases you have planned in the first quarter and vis-à-vis how much is the inflation you are seeing in the current quarter?

Sanjay Agarwal

As we speak for last one, one-and-a-half months we talk about April and May things have not cooled off, products like soda ash and all the prices have gone up sharply. If I look at it on an overall portfolio basis, with the input price increases, we have taken some minor price increases in the last one month also and we will have to continuously track that and keep passing it on as much as we can in line with the competition actions. As we speak this is where we stand and we will have to keep speaking to all you guys if the prices increase from hereon. How much is the increase you have taken i

Thanks for the opportunity. My first question was on fabric wash, for the year you have recorded about 22% growth how much of this is volume, how much of this is price hike, just wanted to take understanding of how much of it will be spilled over impact to next year, so there have been price hikes, but we believe that a good amount of those price hikes came in the second half?

Sanjay Agarwal

Abhijeet, broadly 6 to 7% will be the price hike and the balance will be the volume growth. In fabric wash? Yes. Another two questions I have, primarily we saw that in terms of other expenditure as well on absolute basis when I look at the absolute figure as well as growth it was very well controlled in the previous year but this year we saw some good amount of growth there, so what has gone into it and what have been the key reasons for the increase in other expenditure? That is in line with the topline growth, in other expenses there are certain expenses which are variable in nature like you

Good evening Sir. Thanks for giving me the opportunity and congratulations for good set of numbers in tough time. Sir, my question is on the direct reach, in the initial comments you mentioned that now we have almost reached to one million outlets what is the target for FY2023 and FY2024?

M. R. Jyothy

We have reached the first time one million outlets directly and the target we have set ourselves like we want the industry benchmark that are there and that is what we are aiming at in the next two – three years’ time that is where I would want to. Kaustubh Pawaskar: My second question is on the fabric care category, of course for the full year the growth in detergent would be higher than what it was in the post wash category because price increases would be higher in this category compared to what it was in detergent because post wash even the category was on the recovery mode, so price incre

If you can help us understand some of the initiatives you are working on in terms of expanding IDD, IDD2 for rest of the markets and also there was some initiative around taking Ujala Crisp and Shine to other markets how is that panning out is it as per your expectations behind done ahead of time?

M. R. Jyothy

IDD for us in Kerala where it was strong it continues to be stronger, and we have gained market share and we have extended it to Tamil Nadu and very recently also in West Bengal market. These are the three markets that you would find IDD while Tamil Nadu is responding well. West Bengal it is very initial stages because it is just about two or three months that we have launched it. Since Ujala is a very good or a recognized name in that market, we have good market shares on Ujala Supreme as well which is the post wash. We are hoping that we would get a similar sort of welcome that the consumers

Hi! Everyone and thank you for taking my question. Just wanted to understand the margin point we are seeing 14% cost inflation you mentioned and price hike of 7% taken what is the plan here, let us say prices do not cool off in the six months, so do we gradually take price hikes of the remaining 7% it depends on competition or are we okay to keep margins at like 10-11% and then near-term or are we going to cutting down advertisement spends, what exactly is the plan here I just wanted to understand that?

Sanjay Agarwal

Definitely we want to come back to the same trajectory what we had earlier on the margins. It will be matter of time that we will be able to bring, there will be two things which will happen either the prices will cool off or we will have to take that much of price increases to come back to the earlier margins. Also there is an impact of the mix we will take all measures whatever it takes to get back to the earlier margins, but it may take some time depending on how the overall environment behaves. When we say it takes some time is this a timeline to this like six months, nine months because r

Good evening Jyothy. My first question regarding Maya Agarbatti what kind of strategy to improve the market share because our competitors are old age famous brands, so what kind of strategy you are planning to improve, can you share some details?

M. R. Jyothy

Maya is not a focused brand for us, it is selling well, and we will be selling in those markets where there is good acceptance. Our main focused brands are more in the dish wash, fabric care, HI, and the personal care segments, not very much on Maya. Okay, my second question regarding Jyothy fabric care presently available in six cities, do you have any plan to introduce at Tier-2 cities like Coimbatore or Mysuru or Madurai like that? No, sir as of now we are not expanding, wherever whichever cities we are there we just continuing to operate. Okay, thank you. Thanks a lot.

Thanks for the opportunity. Sir, my question is more on broader strategic in nature. Over the next three to five years across category where do you see bulk of the growth coming from or how do you see the company moving ahead like you can give a broader three to five years things?

M. R. Jyothy

We will be operating in the current segments; we do not have any plans to enter into any food segment or anything like that. We will be operating in the current segments which is the fabric care, the personal care and dish wash segments, our focus would be rather to expand these brands into much more geography, we have lot of grounds to cover in that sense we have first time touched one million outlets and there is lot of scope to grow if we benchmark the competition and the rest of the place where the industry is and that will be our focus. We have plenty of room to grow in all of these brand

I believe that you mentioned that the higher value packs are selling more which means the person is more value point shares but also for us the margins will go down if we sell more of it can we produce the brisk pack kind of a format is that something we have been considering?

M. R. Jyothy

We are working on it, while seeing the current situation that has been hastened and all those consumers tend to pick up those packs which makes much more sense to them and we are happy that these packs are growing, it locks the consumers for the next three to four time which is actually good they get to experience our brands, but having said that we are also working on few other initiatives. Pathanjali Srinivasan: What is the cost of freight for us, as a percentage of revenue in the current year? It will be in the range of around 3 to 4%. Pathanjali Srinivasan: Thank you.

Thank you for the opportunity. Just wanted to ask I saw in the presentation as we have lost market share on Pril even though your performance were well on dish wash we are still losing market share and what are we doing to protect our market share?

M. R. Jyothy

We have gained market share in Exo, so it is not spread across in dish wash. We have gained on Exo, yes Pril there is a small loss there but while internal sales has been growing in double digits, so really difficult to say why is that reflecting that way there, our internal sales have registered double digit growth. Okay, thank you.

Thank you very much. It has been nice to hear all your views on our results and we will continue to engage with all of you. If there are any further questions please reach out to us and look forward to interacting in future again with all of you. Thank you very much.

Management

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Speaking time

Sanjay Agarwal

Moderator

M. R. Jyothy

Aniket

Abhijeet Kundu

Aviral Jain

Sameer Gupta

Kaustubh Pawaskar

Selvamuthukumar

Senthil Manikandan

Opening remarks

Manoj Menon

Hi! Everyone, representing ISEC a warm welcome to each one of you to the Jyothy Labs Results Conference Call. Representing the company today we have Ms. M. R. Jyothy - Managing Director and Mr. Sanjay Agarwal – Chief Financial Officer. At ISEC we have had longstanding coverage of Jyothy Labs stock and we continue to have a constructive view. Now over to Sanjay for the opening remarks.

Sanjay Agarwal

Thank you Manoj and good afternoon everyone and welcome to the conference call of Jyothy Labs. We will be discussing our performance for this quarter, which is March quarter and for the full year ended March 31, 2022 with all of you and we will follow it by the Q&A. This year we had a strong start with all the last four quarters reporting double digit growth and we have closed the full financial year at 15.1% topline growth. In fact this is the first time as net sales value we have crossed Rs.2000 Crores topline sales and exact at Rs.2196 Crores, so we are happy to report this milestone in the life of Jyothy Labs. This has been achieved on back of our growing market share across all categories and if you look at the two-year CAGR we are at 13.3%. As we move along our journey is to build further scale from here on, strengthen our distribution model and gain market share. Our business as we speak is getting much stronger now with direct reach of one million outlets and is growing further

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