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JHS Svendgaard Laboratories Ltd.

BSE: 532771 Sector: Consumer
NSE: JHS ISIN Code: INE544H01014
BSE LIVE 15:40 | 17 Nov 75.25 2.20
(3.01%)
OPEN

76.70

HIGH

76.70

LOW

74.60

NSE 15:59 | 17 Nov 75.20 2.40
(3.30%)
OPEN

76.40

HIGH

76.40

LOW

74.40

OPEN 76.70
PREVIOUS CLOSE 73.05
VOLUME 102893
52-Week high 83.05
52-Week low 34.95
P/E 25.00
Mkt Cap.(Rs cr) 335
Buy Price 0.00
Buy Qty 0.00
Sell Price 75.00
Sell Qty 398.00
OPEN 76.70
CLOSE 73.05
VOLUME 102893
52-Week high 83.05
52-Week low 34.95
P/E 25.00
Mkt Cap.(Rs cr) 335
Buy Price 0.00
Buy Qty 0.00
Sell Price 75.00
Sell Qty 398.00

JHS Svendgaard Laboratories Ltd. (JHS) - Chairman Speech

Company chairman speech

Two points have preoccupied my thinking over the last few years. Brands and oral care.It is my conviction that India is at the cusp of explosive growth in branded products ingeneral and oral care in particular.

The brands argument

India finds itself at the intersection of interesting realities. There is an old Indiathat consumes unorganised and relatively under-branded products. There is another emergingIndia that will trust organised and branded products even when priced slightly higher onthe grounds that the increment is worth paying for enhanced quality and hygienicassurance. Is this brand revolution a sweeping reality? The answer is no. Has the brandrevolution begun to transpire? The answer is yes.

As a growing proportion of India graduates from the unbranded to the branded we arefaced with an interesting reality. India is the second largest market in the world bypopulation but one of the most under-consumed markets in the world across a number ofproducts – not because the market does not possess the resources to buy into brandedproducts but because the market is not offering the range of brands that can possiblyconvert consumers to a superior consumption quality. At JHS we have selected to makebrands the pivot of our corporate strategy. We have selected to work with select brandswho define their product spaces are transforming consumer consumption and areoutperforming the market. We believe that the superior brands will not just care out alarger market; they will grow this under-consumed market faster than ever. At JHS we arepresently working with four principal brands - two of them are multi-level marketingbrands of global repute while the other two are prominent ayurveda and herbal baseddomestic FMCG companies. We believe that each of these brands has carved out a niche in achallenging Indian market place which provides us with the confidence that these brandswill grow in a sustainable way across the future. These brands stand for distinctiveproperties and recalls by virtually transforming the face of the Indian FMCG market in thelast few years emerging as one of the fastest growing companies. One of ourayurveda-based FMCG client is respected as a fast growing company with deep and enduringayurvedic roots. One of our international clients virtually created the multi-layeredmarketing concept in India while the other is further extending the multi-layeredmarketing concept to the rural and remote parts of India . At JHS we believe that byworking as a back-end partner of these companies we are enriching our understanding ofthe oral care market spaces. Even as we continue to do so moderating our risk exposurethrough back-ended supply we have taken a small but decisive step towards creating ourown brand. The business of back-ended supply is predictable secure and volume-driven; thebusiness of front-end brand ownership is unpredictable but marked by considerably highermargins credibility and prospects of sustainable growth.

At JHS we will invest in both business segments around the centrality of a brand play:the success of someone else's brand translating into predictable revenues and the successof our proprietary brands translating into significant outperformance.

Oral care opportunity

For decades the use of oral care in India was a ritual process with the objective toclean one's teeth. Over the last few years the nature of product application has evolved:from mere cleaning the complement of toothbrush and toothpaste has evolved to curing; thesubject of mouth freshening has evolved to holistic oral health care.

This evolution has widened the market for a conventional and staid sector. The sectoris marked by a wider number of products; branding has evolved from plain marketing tofocused branding around desired outcomes.

The result of a larger interplay of players and brands has virtually stirred amonopolistic and sleepy segment of India's FMCG sector into vibrant health. Ayurveda hasemerged as a H 2000 crore category for the first time; the multinational market leaderyielded market share for the first time in 70 years.; a market that would growconsistently at 6-7% reported double-digit growth on a larger base. At JHS we are ridingthis market growth by working with market-expanding clients on the one hand throughcapacity expansion and by prudent products introduction under the proprietary brands onthe other. We believe that this sharp growth coupled with enduring relationships withsome of the largest customer brands will enhance margins profits and shareholder value.

Attractively positioned

At JHS we are attractively placed to capitalise on the emerging sectoral reality. Onewe will continue to invest in our business to the extent that our Balance Sheet anddesired risk appetite will permit. Besides we intend to invest in a variety of FMCGproduct ranges across different geographies with the objective to diversify and de-riskour portfolio. Two we are debt-free and expect to remain so. Three we will focus onsustainable growth as opposed to the fastest growth in a largely under-consumednation.remain. Four we will leverage the benefits offered by a passionate team that hasseen through one complete business cycle – crest and trough – and are equippedto drive the business forward. Five we will utilise the proceeds from the qualifiedinstitutional placement to enhance our toothbrush and toothpaste manufacturing capacitieslikely to generate attractive growth for the next couple of years.

Outlook

At JHS we believe that guts lead to glory.

Even as the Company was stabilising its financial structure it selected to expand thecapacity of its toothbrush and toothpaste segments aligning both. The Company expects tocommission its capacity expansion by the second quarter of the current financial year andis expecting a 20-25% revenue growth on account of capacity expansion and another 10-15%by way of organic growth in the business. We believe that these initiatives shouldincrease revenues and widen margins strengthening our business sustainability.

Nikhil Nanda

Managing Director