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Jyothy Labs, owner of brands such as Ujala, Margo, Exo, MAXO, Henko and Pril, is planning to be debt free by December. For Q1 FY21, it saw a 34 per cent YoY rise in consolidated net profit to ₹50 crore, a 2 per cent increase in total income to ₹437 crore and volume growth of about 6 per cent. According to Ullas Kamath, Joint Managing Director, Jyothy Labs, consumer sentiments are “much more positive now when compared to April”. Neighbourhood stores or kiranas have made a big-time comeback, he said. In an interview with BusinessLine, Kamath spoke about the outlook for FY21, rural recovery and buying patterns. Excerpts:
How is the debt position of the company?
As of now, net debt is about ₹80 crore and it is around 3-4 months of net cash flows. At the current rate, there is neither any planned capex nor any major investment plan. So, ideally, by the December quarter, we should be debt-free.
Is it possible to peg an outlook for remaining portion of FY21?
It is difficult to predict numbers due to Covid19 uncertainties. However, consumer sentiments are much more positive now than what they were at the beginning of the fiscal. Initially, there was fear considering the (number of) global deaths and the rising number of positive cases. But then, the worst affected countries like the UK, Italy and China started recovering, leading to improvement in sentiments in India. Now we see a near normal situation in consumption. Businesses, especially ours (FMCG), are picking up. Earlier people were panic buying. Now, almost normal buying is happening.
Rural is doing well and there is no inventory hold for us. Yes, there are intermittent or localised lockdowns. So we are seeing some ups and downs. But, that will be the case for this fiscal, I guess.
In localised lockdowns, last mile delivery from retailers (to consumers) gets affected. But, people generally stock up since announcements are in advance. Even in lockdowns, grocery items are categorised as essentials, similar to milk and medicines.
If there is a serious second wave and a prolonged lockdown happens, fear may set in again. But we are well equipped to manage the situation with our experience. At the moment, positive news of vaccine trials is giving hope to all.
Did you notice any change in buying patterns?
While rural people are looking at lower unit packs, the trend is reversed in urban areas. People here (urban) are opting for larger or family packs, as they want to limit their time at stores. Moreover, some consumer down-trading is happening but mostly within the same brand. We are witnessing huge demand for ₹5 and ₹10 packs (smaller SKUs) of Exo and Margo.
What has been your fastest moving product this time?
Dishwashing products like bars and liquids — Exo and Pril — have seen very healthy uptick. The category has grown for all. Increased usage led to a 16 per cent YoY growth for Jyothy Labs in the category.
But weren’t Margo sales below expectations?
Yes, a quarter-on-quarter trend looks somewhat flattish. But consumption has gone up in May and June. April was bit negative as sales got affected in major markets like Tamil Nadu and West Bengal. Historically, these are our strongest markets. Lockdowns in both these States affected our sales in April.
Trucks and labourers were not available across Margo facilities in Guwahati, which affected movement into West Bengal. We could not supply to Tamil Nadu with our offerings from the Puducherry facility.
Margo sanitisers and hand washes have also grown (in sales) in July. It’s a ‘one basin, one handwash bottle’ phenomenon at homes. Hand sanitisers are the norm in offices or when people are going out. We are exploring ways to ramp up production capacities for sanitisers. Both handwashes and sanitisers will stay as a serious category post the pandemic.
How has the demand been for fabric wash?
We have main wash (detergent powders and washing machine offerings) and post-wash products (fabric whiteners and Crisp & Shine). Post wash is affected, as a category, with people not going out much.
Main wash is doing well, but sales have been affected at modern trade outlets and canteen stores department. Malls and big retailers had issues in re-opening and supplies. But, even in places which were open, consumer behaviour was more to avoid large format stores or crowded hypermarkets. General trade did extremely good (sales) for us and partially made up for the loss in other formats.