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Analyst Meet / AGM
02-Nov-12
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Conference Call
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Jyothy Laboratories
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Expects a top-line growth of 25% for FY13
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Jyothy Laboratories (JLL) held a conference call to discuss the results for the quarter ended September 2012. Mr. K Ullas Kamat, Deputy MD, addressed the meet:
Highlights of the meet:
- For Q2 FY13, the net sales have gone up by 15% to Rs 177.83 crore while net profit inclined by 22% to Rs 15.27 crore. The operating profit margin was at 12.58% vs 4.97%.
- The volume growth for the quarter was flat because of rise in prices of Maxo & Exo (marginally) and reduction in trade margin.
- The input cost on large part is now stable.
- Fabric Care business, which includes fabric whitener, fabric detergent and soaps, declined by 1% to Rs 64.49 crore. The company's sales was impacted due to rise in price and cut in trade margin. Ujala fabric whitener continues to be the market leader with a market share of 72.9% by value.
- House Insecticide, which includes mosquito coils, aerosol and multi insect repellent cream saw revenues at Rs 38.46 crore, a decline of 1%. Maxo Coil had 18.6% all-India market share by value and 20.7% by volume for the year ended September 2012. It had 26.5% Rural India market share by volume for September 2012.
- In Maxo, the company has lost a marginal market share. The gross margin was up in Maxo to 25% because of price hike of 12%. Some of SKU price is in line with competitors while some are more than competitors.
- Maxo liquid contribution has gone up from 8% to 12%. Going forward, the company expects 60% contribution from coil and 40% from non-coil one. If it is achieved, it will have gross margin of 40% and EBIDTA margin of 14% - 15%.
- The mosquito repellent category has not shown any growth in Q2.
- Surface cleaning, which includes dishwashing products grew 18 % to Rs. 46.87 crore. Exo Bar had 28.3% South India market share by value and 25.5% by volume for year ended September 2012 and stood at No. 2 position. Kerala market share by value was 54.9% and 52.7% by volume for year ended September 2012 and stood at No.1. The brand is now available in most of the big cities.
- Other products have grown by 157% to Rs 27.99 crore.
- The company's new Management team is in place and has taken some bold steps. The company has done integration of sales and distribution with Henkel. The company is moving from own Depot to C & F, thus resulting in saving of 2%.
- The company is consolidating its distribution network. In urban region distribution will be from company - C&F – stockists – market, while in rural region distribution will be from company - C&F – stockists – super stockists- market.
- The rationalization of the channel margins will result in Gross margin improvement of 4%.
- The company in return of cut in distributors margin is working on model where distributors will get ROI of 20% - 22%.
- The company had identified savings opportunities in sourcing and packaging expected to result in 2% margin improvement
- The company's 14% of sales comes from CSD.
- Henkel India (HIL) reported sales of Rs 84.52 crore. Rationalization of Henkel distributors done in the month of August/September resulting in temporary loss in primary sales. Integration of JLL and Henkel distribution underway and expected to be completed by December 2012 and sales expected to be normal from coming quarters.
- The company will see synergy benefit next year, till then it will manage through two companies:- Jyothy Laboratories & Jyothy Consumer Products and two billing systems even though distributors are same.
- Avg, cost of debt is 11%.
- The company ad spend for FY13 will be 9% - 10% and for FY14 will be 12%.
- The company is targeting EBIDTA margin of 16% for both the companies by March quarter. It expects a gross margin to be around 45% in March quarter. For FY14, it expects a margin of 15% and anything beyond it will be invested in advertisement.
- The mgmt expects 10% - 12% volume growth in Q3 and 15% by March end. It expects a top-line growth of 25% for FY13.
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