Mumbai-headquartered Jyothy Laboratories Ltd has promoted its deputy managing director, Ulhas Kamath, to joint MD. Coming right after the announcement of its third quarter results this week, it signifies a thumbs-up for the man responsible for acquiring and then integrating Henkel India, the loss-making former subsidiary of German major Henkel AG, with Jyothy.
The Rs 600-crore acquisition done last year effectively put Jyothy, the maker of Ujala Washing Powder and Ujala Blue, among the top five fast moving consumer goods companies in the country, with a combined turnover of Rs 1,300 crore, having presence in categories such as fabric care, surface cleaners, personal care, oral care and household insecticides.
Currently Jyothy has an 84 per cent stake in Henkel. While it has said it will eventually merge Henkel into Jyothy, Kamath does not specify when this is likely to happen. Speculation is rife that the merger will happen in the next financial year.
Jyothy reported a 78.3 per cent increase in net profit for the quarter ended December 31, to Rs 29 crore versus Rs 16 crore reported last year. Net sales were Rs 166 crore, a growth of 12 per cent, versus Rs 148.4 crore reported last year.
The plan is turnover of Rs 3,000 crore in five years, something Kamath has been working towards by streamlining production, distribution and marketing, as well as reducing the debt on Jyothy's books. The firm has total debt of Rs 510 crore, of which Rs 450 crore is a term loan, taken from Axis Bank, to refinance the earlier debt taken for the acquisition. The balance Rs 60 crore is loans taken for working capital requirements, Kamath said.
"While we can take loans of up to Rs 100 crore for working capital needs, we are utilising only 60 per cent of our requirement. Our attempt is to try and bring down our costs, so that we can curtail taking loans," he said.
In the past six to eight months since Henkel’s acquisition, Jyothy has moved to a two-layered distribution from a three-layered system to streamline operations between itself and Henkel. This has brought down distribution costs by about five per cent, Kamath said. It has also stopped outsourcing production to third-party manufacturers. All its 28 factories, plus a manufacturing unit of Henkel in Tamil Nadu, have been pressed into service to produce the companies' brands from Ujala to Maxo, Exo, Mr White, Henko, Chek, Margo, Pril, Neem and Fa.
Of these brands, Pril and Fa have been licensed to Jyothy by Henkel AG for a two per cent royalty. The balance are brands that they own.
Jyothy is in the process of relaunching Pril and Margo, the campaigns of which will be released in the current quarter.
Pril is a well-known brand of glass and surface cleansers, while Margo is a neem-based soap, popular in the south. Kamath says he has high hopes for Margo, which is an iconic brand, launched in 1920. "The relaunch will help Margo recapture its former glory," he added.