Companies

Jyothy Labs looks at improving margins through better product mix

Abhishek Law Kolkata | Updated on July 26, 2019 Published on July 26, 2019

Ullas Kamath, Joint MD

No plans to hike prices across its portfolio: Joint MD

Home-grown FMCG company Jyothy Labs is eyeing an improvement in margins as it looks at a better product mix through premium and differentiated offerings across personal and fabric care segments. The company is eyeing a 10-12 per cent volume growth with no immediate price hike across its portfolio.

Launches were pushed back into the second quarter and onwards, in view of a slowdown in consumption and also because of the re-branding exercise the company undertook.

According to market sources, personal-care, which accounted for 14 per cent of Jyothy Labs’ sales in the first quarter, has seen a strong rebound. Its ‘Ujala Fabric Whitener’ gained market share and ‘Henko’ and ‘Ujala Crisp & Shine’ saw good traction. This was after dishwashing and household insecticide segments reporting a flat turnover or a decline year-on-year.

The company reported a turnover of ₹423 crore (2.2 per cent growth YoY) and a net profit of ₹37.4 crore in the first quarter.

“Launches were expected in Q1. But in view of the slowdown in consumption and also the rebranding exercise, we thought of pushing things into Q2 eyeing the festival season,” Ullas Kamath, Joint Managing Director, Jyothy Labs, told BusinessLine.

Launches

Three-four new launches may happen this year. Immediately on the cards is an extension of its popular soap ‘Margo’ brand into face-washes.

Jyothy Labs also plans a geographical expansion of its fabric-care sub-brand ‘Ujala Crisp & Shine’. The sub-brand in the post-wash category is popular in Kerala and Tamil Nadu. The plan now is to extend it to West Bengal, Andhra Pradesh and Karnataka.

“We will look to take ‘Ujala Crisp & Shine’ national once it becomes a ₹100-120 crore proposition, say by around 2021; it was around ₹80 crore in FY19,” Kamath said.

Margin improvement

According to him, better product-mix and gross margin improvement will shore up EBITDA (earnings before interest, taxes, depreciation and amortisation) to 16-17 per cent. In Q1, it was 15.5 per cent. While it improved on Y-o-Y (from 13.7 per cent), it dipped Q-o-Qon (16.4 per cent).

“There was some slowdown in consumption. And the monsoon have been delayed.

“By September, a clear picture should emerge as to where we are heading,” Kamath said, adding that a 10-12 per cent volume growth is achievable.

Softening raw material prices apart, Jyothy Labs has “no plans” to hike prices. Rather, it could consider offers to boost consumption.

Published on July 26, 2019
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