Jyothy Labs sees demand recovery across key markets

Abhishek Law Kolkata | Updated on August 12, 2020

Ullas Kamath, JMD, Jyothy Labs

FMCG company reworks business strategies to ensure last-mile delivery

Home-grown FMCG company Jyothy Labs is witnessing demand recovery across key markets pan-India. The situation is “near normal” with the rural economy, which had for the last seven quarters been facing headwinds (pre-Covid), now growing faster than urban markets.

For the June quarter, volume sales were up 6.1 per cent YoY and July sales have been “positive” too.

According to Ullas Kamath, Joint Managing Director, Jyothy Labs, “overall consumption has gone up”.

In rural areas, smaller local players are badly hit because of cash flow issues leading to growing salience of known brands. The last-mile delivery execution has been a game changer for the company.

Jyothy Labs is also not witnessing any inventory holding-up, indicating quicker sales. Earlier, there were 10 days of stock at factory-end, another 7-odd days of stock at warehouses and 15-odd days of goods across stockists.

Rising cash sales

Moreover, cash sales are happening and there is “no credit” in general trade, which is more than 85 per cent of total business.

Post the Unlocking, all 27 units of the Mumbai-based company are operating at an average combined capacity of 90 per cent.

Kamath pointed out that despite lockdowns in urban markets the situation was vastly different in semi-urban and rural areas. Jyothy Labs looked at reaching to the general trade in these “less affected” areas first.

“We looked at stores in the nearest operating market first,” he said, adding that low unit packs were driving demand in non-urban areas. Accordingly, offerings across popular brands like Exo and Margo soaps were re-worked.

Sales strategy was realigned to begin as early as 6 am (and continue till 11 am). This helped the company bring down time-to-retailers and ensure quicker delivery of stocks at smaller stores. It was safe for the company’s sales staff too with lesser customers at stores in early hours of the day.

“With rural spending going up, we expect the rural to urban contribution to (our) turnover to see a slight change. Normally, rural to urban contribution is 40:60; which may change to 45:55 this year,” he said.

Jyothy Labs – which also owns popular brands like Ujala fabric whitener, Exo and Pril dish washing bar and liquid, among others – saw a 34 per cent rise in consolidated net profit at ₹50 crore for the quarter ended June 30, 2020. Total income saw an over 2 per cent YoY increase to ₹437 crore.

Push for direct distribution

With large wholesale markets in urban areas still grappling with the pandemic or falling under containment zones, Jyothy Labs is reaching out directly to retailers and stockists. It has a direct distribution reach of approximately 900,000.

The push for direct distribution, with a re-emergence of neighbourhood stores and general trade in the “new normal”, has helped the company deepen reach and counter local lockdowns. E-commerce push has also happened.

“Our e-commerce sales have doubled, but its on a much smaller base,” Kamath said.

Published on August 12, 2020

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