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Localised lockdowns have affected sales in second Covid wave, says Jyothy Labs

Abhishek Law Kolkata | Updated on May 20, 2021

Ullas Kamath, Joint Managing Director, Jyothy Labs

According to Ullas Kamath, Joint MD, operations such as stock replenishment, and sales have to be worked within a short time frame

A ravaging second wave of Covid-19 infections may not have hit demand, but there are challenges at the stockist to retail-end sales, mainly due to localised lockdown rules. Rural demand continues to be strong, growing at 1.3 times of urban, for home-grown FMCG company, Jyothy Labs, best known as makers of Margo soaps, Henko detergents, Ujjala fabric whitener and Exo & Pril dishwashing soaps and liquids.

According to Ullas Kamath, Joint Managing Director, Jyothy Labs’ operations have not been hit and supply chains “remain intact”. All 27 factories are operating at full capacity. However, there are localised lockdown rules in place across states, which make end-sales a time-bound affair. Most states allow shops to open for a limited time window of three-four hours every day. Stock replenishment, sales at the retail end and other operations have to be worked out within this period.

Though rural demand has not been hit, increasing infections can postpone demand as people hold back on cash. Factors such as the monsoon, government doles, cash support and crop prices will matter in the coming quarters. Historically, April to September are good months for rural sales, he added.

“Demand has not been hit so far. In April and May till date, we are witnessing double digit demand growth. Segments like dishwashing soaps, detergents, household insecticides and personal care continue to do well. Fabric care, particularly, the post-wash segment, is a bit affected with people staying indoors. Going forward we see numbers on these lines, too, as most of our products either fall in the Covid-care segment (like santisiers, dish wash, so on) or amongst essentials,” Kamath told BusinessLine.

Handling Regional Lockdowns

Unlike a national lockdown, the current spate of regional lockdowns does not affect movement of raw materials or finished goods from factories to distributors or stockists. Interstate and intrastate movement have not been hit either. But there is “little challenge” on sales to retail end, particularly since deliveries have to be time-bound.

“But we have got a hang of things now. In Lockdown 1, everything was unknown. Permissions were not clear. This time it is much more organised. We can move our products right from say Guwahati to Bengaluru. There is no stoppage anywhere,” he said, adding: “In Bengaluru the stockists have to send it to retail stores, primarily general stores. But this has to be done in a timebound manner, say 6 am to 10 am. This is where it’s a bit tough. So we are planning operations and deliveries, which include sales at the retail end being pushed during the allowed time frame.”

Taking orders via WhatsApp or over the phone are being pushed. Jyothy Labs continues to follow an upfront payment model. However, it has brought down stocks available with distributors to 10 days; down from the pre-Covid practice of 15-21 days. The move, Kamath says, also helps in better flexibility in managing localised lockdowns.

Acquisitions

Having turned debt free in FY21, the company is now building up a “war chest” for acquisitions. Target acquisitions could be in the range of Rs 500 -1,000 crore and will be explored over the next one or two-year period. Plans are afoot to shore up sales so as to improve market share. Ad spends are up 25 per cent on a yearly basis. New product launches though have been held back “for better times”.

“Ideally, we should look at inorganic growth. Our cash flows are Rs 400 crore annually. So a Rs 500–1,000 crore acquisition target looks feasible. But, with the current outbreak, acquisitions are impossible. We will explore acquisitions in the next one or two years. Till then we should shore up our topline, gain market share during this period,” he said.

In calendar year 2020, the company gained market share across offerings like Exo Bar (120 basis points over CY19), Pril (130 bps), Maxo – coil (170 bps) and liquid vaporizer (40 bps) and Ujala fabric bightner - (60 bps).

Published on May 20, 2021

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