Jyothy Labs Limited
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Key numbers — 24 extracted
13.7%
good quarter. We continued to have healthy double digit top line growth. This quarter we had for 13.7% and even if you look it on two year CAGR basis we grew by 17.5 and on three year basis at 12.2%.
12.2%
r 13.7% and even if you look it on two year CAGR basis we grew by 17.5 and on three year basis at 12.2%. If we look at this for this quarter ex HI business our business has grown by 21.8% so overall to
21.8%
year basis at 12.2%. If we look at this for this quarter ex HI business our business has grown by 21.8% so overall to sum it up as a good quarter. We have been able to strengthen our core business with
50%
consumes key raw materials like labsa, soda ash, palm oil which have increased by at least 40 to 50% in the last one year. However, as we speak we believe on margin front more or less we have bottom
14%
rket share. To share some of the facts for Jyothy’s portfolio, our input prices have increased by 14% as a percentage to turnover over previous year. We have mitigated the same with 8 to 9% price i
9%
eased by 14% as a percentage to turnover over previous year. We have mitigated the same with 8 to 9% price increases across our portfolio and balance has impacted our margins. Moving on to the cat
38%
alance has impacted our margins. Moving on to the category performances fabric care is doing well 38% growth this quarter. Our distribution drive has helped in the growth of detergent brands. In this
15%
digit growth for this quarter. Even if you look at our three year CAGR basis it is a good healthy 15% growth. Dish water category has under penetration and our consistent drive and higher offtake of
75%
a have been impacted. The temperature has been really high. Both these north and east account for 75% of our sales and these are big markets for us. We have a higher market share there and because of
20%
wever if we look at three year CAGR basis the revenue growth is 20% and our market shares have improved both in coils and liquid is back to 10% so overall a very pos
10%
20% and our market shares have improved both in coils and liquid is back to 10% so overall a very positive momentum for us in HI category. Also when we look at HI this quarter
40%
especially in the matic category from the powder to liquid which is as of now kind of growing at 40%. Moderator: Thank you. The next question is from the line of Percy Panthaki from IIFL. Please g
Guidance — 19 items
“We will be discussing the performance of the company for June quarter 2022 with all of you and we will follow it by question and answer session.”
“This quarter we had for 13.7% and even if you look it on two year CAGR basis we grew by 17.5 and on three year basis at 12.2%.”
“Even if you look at our three year CAGR basis it is a good healthy 15% growth.”
“We have a higher market share there and because of this extreme weather, the impact has been more for us this quarter resulting in negative growth however if we look at three year CAGR basis the revenue growth is 20% and our market shares have improved both in coils and liquid is back to 10% so overall a very positive momentum for us in HI category.”
“We expect the margin profile for this category will improve from here on so.”
“On the margin front we expect that with the softening of commodity prices of crude oil, palm oil in specific and others it should reduce the inflationary impact and with the normal monsoon and government welfare measures we believe consumption should pickup and it should gain to our overall growth momentum for us to deliver double digit growth in the next few quarters as well.”
“I have two questions first on HI category for liquids your market share has moved up significantly just wanted to understand from where this market share gains are coming and secondly overall segment revenue declined by 38% and it seems that growth for liquid segment should have been much better given the market share gains present in urban areas so any colour on that will be really helpful.”
“Is it the smaller players who are losing out because their inability to manage the RM index and over and above any colour on matic and liquid detergent will be really helpful because although you are on very lower base but that is a segment we are seeing much faster growth and last question was volume growth for the quarter any colour on that what is the volume growth for the quarter will be really helpful.”
“Hi I was looking at your segmental growth and all of the categories have done well except for personal care where the three year CAGR is only 5% in fact in most companies this soaps division actually has seen a very good growth because it has seen fair degree of price increases.”
“That is not figure in the three year CAGR but anyways let me take this offline.”
Risks & concerns — 8 flagged
We have been able to strengthen our core business with focus on distribution and brand investment and this is in spite of the quarter witnessing high inflationary pressure on the household budget and overall economic challenge post COVID.
— Sanjay Agarwal
We also had the sanitizer and the hand wash got added in the last two years because of the pandemic and people have taken it they have come out of it more and less and we see a kind of decline or rather not as much acceptance it was in the past and hence you see a degrowth or rather kind of flattish growth on those segments.
— M. R. Jyothy
Secondly on Pril in your annual report also you have given market share for Pril across three years and there is a declining market share there so while you have done very well in Exo with market share increasing, Pril market share have been weak so can you tell us what are the actions you are taking to gain back that market share.
— Percy Panthaki
Whatever competitive requirements are definitely we will do that, but difficult to predict for now.
— Sanjay Agarwal
And what will be the volume decline in rural area.
— Naysar Parikh
Has there been decline in margins the reason is due to Ujala fabric whitener or it across the portfolio less than effective prices have been taken, required price hikes.
— Abhijeet Kundu
However as you know both the soda ash and labsa prices have been on tearing rise and therefore the fabric care brand category has seen a margin decline which we hope in next few quarters if things improve we should be able to increase our margin there and when I speak about April to June quarter when we have taken prices increases yes there have been more in the fabric care category so overall we should be in good margin profile in the next few quarters.
— Sanjay Agarwal
Senthil Manikandan: My first question was on the impact of private labels on our different categories.
— M. R. Jyothy
Q&A — 14 exchanges
Q
Hi team Vishal here. I have two questions first on HI category for liquids your market share has moved up significantly just wanted to understand from where this market share gains are coming and secondly overall segment revenue declined by 38% and it seems that growth for liquid segment should have been much better given the market share gains present in urban areas so any colour on that will be really helpful. Second question is on the fabric segment marketer highlighted that they had seen high single digit volume growth during this quarter and plus they have also gained some market share. Y
M. R. Jyothy
On the HI segments. We have gained on our LVs which is the liquid format we have gained overall but the growth has not been there because of the extreme heat. Our strong market are north and east and what has happened is overall the category has not done really well in this quarter owing to seasonal changes as our strong markets are the north which is the Punjab Haryana all of those. Fabric segment if you see as a category it is a flat category. Now giving you a perspective on the liquid and the powder categories, we have launched liquid Ujala and Henko Matic both are in the south right now an
Q
Hi I was looking at your segmental growth and all of the categories have done well except for personal care where the three year CAGR is only 5% in fact in most companies this soaps division actually has seen a very good growth because it has seen fair degree of price increases. In fact price increase in soaps have been higher than what they have been in most other FMCG segments so despite this only 5% and let us say even if we have not taken price increases as much as the competition, but still there would be a fair amount of price increase so just wanted to understand what is the reason behi
M. R. Jyothy
It is not market share loss. We have grown. The only thing is we have taken lot of price increases and It is the price increases which has affected the volumes. Madam I am talking about in value terms growth only so if there is a price increase actually in most FMCG companies that adds to the overall value growth. We also had the sanitizer and the hand wash got added in the last two years because of the pandemic and people have taken it they have come out of it more and less and we see a kind of decline or rather not as much acceptance it was in the past and hence you see a degrowth or rather
Q
Just if you could let me know about market share they are improving in Mr. White Segment. Can you throw some colour what is the present capacity relation compared to pre COVID level and present level and last and final question will be regarding how much cash we have available, any possible near term acquisition is possible. Can you throw some colour.
Sanjay Agarwal
Sir we do not give capacity of any individual brands. Overall as a company we have 22 factories and we are operating at 65% capacity utilization at this point of time. Okay compared to pre COVID level it is same or we are slow. No we are now back to pre COVID numbers. Okay what about cash position available. we have a cash position a net cash of around 80 odd Crores as of June 30th. Okay thanks a lot.
Q
Hi good evening so in your presentation you have mentioned in the category highlight that there has been an extensive distribution which is extension distribution rise for all the detergent brand so can you give just more sense on across the detergent portfolio where this expansion has happened on distribution maybe brand wise or how you want to answer that.
M. R. Jyothy
So on detergents we have brands like Henko. We have More Light, Mr. White, and Ujala IDD. Ujala right now sells in Kerala and Tamil Nadu and we had extended it to West Bengal about six months back and More Light and Mr. White are the brands that are seeing the momentum right now. They were initially there in one or two states as such and we are seeing lot of geographical expansion and acceptance also from the consumer so hence these two brands are growing. Any sense on numbers in terms of what the distribution was for these two brands in the percentage of your total distribution and what it is
Q
Thank you for the opportunity and congrats on good set of numbers. Sir my first question is with regards to where we added benefit that is expected to come with lowering of the RM prices but you know your charge does show even in the July month if you compare Y-O-Y basis some of the RM has been inflationary driven to an extent so do you expect these are incremental insights on the margin versus Q1 to Q2 and then the softening to come in Q3 or the margin impact has brought up in Q1 itself and we should incremental in Q2.
Sanjay Agarwal
yes, the softening of prices should sustain for a period of time. Okay and Sir one book keeping question in other two segment. The other income this quarter seems to be particularly high with 5 to 6 odd Crores this seems to be higher so any one of there and also on tax period you have seen possibly a guidance to 2023 full year and 2024 full year. Other Income for the quarter includes a sale of our Bhuvaneshwar factory which leads to a gain of 8.8 Crores and on the tax we continue to be on the MAT, you can presume 17 to 18% for the full year for 2023 and 2024 as well. Sorry 17 to 18% right. Yes
Q
Hi team. I have a question regarding your HI business. I am not concerned about your recent quarter but when I look at the longer term trajectory we are being hardly profitable over 5 years, 7 years, 8 years and it is not like that. We have kind of leadership position her us distant second but still second so what more we can do here to turnaround the business or it is something which we can have look of divesting end perhaps concentrating more on personal and home care.
Sanjay Agarwal
This is a business which has a long term value. This is a business where we have leadership position. It is a large category. Unfortunately it has a seasonal impact. This business in only 10 to 15% of our total portfolio and we are focusing on profitability and we are going in the right direction. We are seeing the result, it is to move on to the liquid side business and our all India market share has now reached to 10% so we will have to be patient in this business and we believe that once our mix of coil to liquid becomes 50:50. I mean currently we are at 30-35% liquid. If it touches 50% ove
Q
Hi thanks for the opportunity. Couple of questions from my side. Sir first question pertains to now that we have created an e-commerce channel, so what percentage of our current revenue is coming from this two channels. I will come back in the queue.
Q
Hi thanks. I have a question on H1 again so essentially in Q2 also the season seems to be a bit challenging in most of the countries you have seen high rainfall and UP, Bihar, Jharkhand, Bengal etc are big deficit also both of which are not good from HI demand perspective so would you say Q2 also is looking tough for the category.
M. R. Jyothy
So initially yes. We are hoping for good rainfall to happen but it has been evading north and east. As you rightly said Bihar is almost on the verge of declaring a drought so we are certainly experiencing fully by August, September if things improve it should see some positive changes. Right. My second question is on quick commerce and e-commerce. So we have seen quick commerce emerge as a very good opportunity in some of the FMCG categories. How relevant is this to your category and if you could talk about the tie ups anything different you are seeing here verus the broader e-commerce and thi
Q
Hi thank you for the opportunity. My question is on your margins for the dish water segment. They have sequentially improved and also there is an improvement in your market share so any colour on that.
Sanjay Agarwal
It is a good thing somewhere the margins are looking good. Yes we have taken lot of effort and both the Pril and Exo has worked well. For this quarter around 8 to 9% has been the pricing growth and 2 to 3% has been the volume growth so we continuously keep investing into it. There have been much of price increases, grammage reduction, focus on LUPs almost those things have worked well for us. Thank you and any colour on the volume growth on the fabric care segment. On fabric care volume growth has been good. Broadly if you look at it 14 to 15% has been the price increases in this category and
Q
Hi. Thanks for the opportunity. According to the mix between rural, urban and on the rural side what is the volume value growth are you seeing, so you can just talk about the demand outlook between the two.
Sanjay Agarwal
So I think if you look at in on rural market obviously it is more LUP driven market and the volumes do get impacted by the when the prices of the product improve significantly but that is market which we have to keep investing into it, urban is doing better, modern trade and e- commerce large sec are doing good so it is mix of both stories where will have to keep focusing on both market and there is revival of consumption or demand in rural India also. Most part of India if the monsoon are doing good overall all the government measures have helped the rural economy so we look at both the urban
Q
Hi good evening so my question was on the margins in fabric care. We have taken price hikes but there has been good amount of impact on margins, has it been due to lower than required price hike taken in Ujala fabric whitener or across the board for everything. Because Ujala fabric whitener is one of your most profitable product and it is more rural focused. Has there been decline in margins the reason is due to Ujala fabric whitener or it across the portfolio less than effective prices have been taken, required price hikes.
Sanjay Agarwal
So Sir across portfolio we have taken the price hike as the competitive market allows us to take which I am saying is on the main wash. On the post wash since we own the category we have taken price hikes as required so there is no delay from our end to take the price hikes. However as you know both the soda ash and labsa prices have been on tearing rise and therefore the fabric care brand category has seen a margin decline which we hope in next few quarters if things improve we should be able to increase our margin there and when I speak about April to June quarter when we have taken prices i
Q
Thanks again. So my first question pertains to modern trade and e-commerce what percentage of our current revenue not the quarterly but overall revenue trailing 12 months is coming from modern trade and e-commerce interns of market which of our brands portfolio is hiring next in terms of market share in modern trade versus general trade.
Sanjay Agarwal
So modern trade and e-commerce collectively contribute around 10 to 12% of our total portfolio and market share if you are comparing in MT to GT it will depend on each brand to brand but overall we have kept parity on our market share and never trying to go over indexing on our market share in modern trade just to get some quick large pack sales and stuff like that. We always keep a good mix in both GT and MT and that is working well. Sanjay the question was actually on specific brands only. Which brands are faring better versus GT on MT within our portfolio. It has been more in dish wash whic
Q
Hi thanks for the opportunity. My first question is on how private labels will impact our category. Which are the categories impact the private labels and my second question is on distribution on the fabric. In your growth initiative strategy of outline how much you have achieved and how much is pending particularly from the distribution point of view thanks. Second question is on fabric side what is the potential of distribution expansion that can happen over the next two to three years.
M. R. Jyothy
On that we have few brands in select geographies so the thing is we are taking each geographic expansion of each of these brands. In the future you will all those growth coming in. We have pockets of strength and we have certain brands in certain markets like Kerala, Tamil Nadu. We would be expanding it in the other geographies of India. Senthil Manikandan: My first question was on the impact of private labels on our different categories. So private label frankly as of now there is no impact and private labels were there before as well. Before they have already existed but there has not been a
Q
Thank you every one. Thanks for asking all these questions and going through presentation and having a discussion with us this afternoon. We will look forward for any further questions and clarifications you require and look forward to catching up with you next quarter again. Thank you very much.
Opening remarks
Manoj Menon
Hi! Everyone, a wonderful good morning, afternoon, good evening to you depending on the part of the world you are joining this call for. At ISEC it is our absolute pleasure to host once again the management of Jyothy Labs Results for the Q1 FY2023 results conference call. At ISEC we continue to have a constructive view on Jyothy Labs business and on the stock and the results which were reported couple of hours back in our opinion has been top of the street. Welcoming M. R. Jyothy - Managing Director and Sanjay Agarwal – CFO to the call. Over to the management please. Thank you.
Sanjay Agarwal
Thank you Manoj and good afternoon everyone and welcome to the conference call of Jyothy Labs. We will be discussing the performance of the company for June quarter 2022 with all of you and we will follow it by question and answer session. Overall, we had a good quarter. We continued to have healthy double digit top line growth. This quarter we had for 13.7% and even if you look it on two year CAGR basis we grew by 17.5 and on three year basis at 12.2%. If we look at this for this quarter ex HI business our business has grown by 21.8% so overall to sum it up as a good quarter. We have been able to strengthen our core business with focus on distribution and brand investment and this is in spite of the quarter witnessing high inflationary pressure on the household budget and overall economic challenge post COVID. Specific things for our business, we see our consumer franchise getting stronger by every quarter. We have consistently been able to strengthen our market share across our brand