It gives me pleasure to highlight that inspite of the FMCG sector slowdown JyothyLaboratories performed reasonably well in the industry. We are largely an organic'growth story in India's FMCG consumption space with limited advertisement and marketingspending. So what lies at the heart of Jyothy's performance? It is our ability to identifythe everchanging needs of consumers and devising products that address these new desires.In turn this has been made possible owing to our e3orts in connecting with consumers atvarious levels forums and occasions; the ability to aggregate insights and developimpact-driven products around a unique need- based proposition that translates into aconsumer buy-in.
FMCG: The backbone of India's consumption story
The Indian FMCG industry is poised to grow at a healthy ~20% CAGR to 2020 according toA.C. Nielsen. Some of the factors that we feel will make this a reality are robustexpected GDP growth increasing disposable incomes and growing living standards. Besidesevolving preferences increased demand and expansion of product categories could catalyseo3take. We believe that some trends that catalyse the sector could comprise the following:
Smaller SKUs: to make products a3ordable for even the lower income group
Product extensions and innovations: To enhance consumer excitement
E-commerce: To widen purchase options and convenience.
As a Company deeply enmeshed in India's consumption space we focus on remaining aheadof the curve anticipating consumer needs and turning these into valuable customerpropositions.
At the heart of Jyothy
At Jyothy our objective is to provide superior returns to all our stakeholders throughcontinuous new product formulations research as well as deliverables enhancement by itsproducts. Innovation is Jyothy's principal business driver. We compete with ourselves increating progressively better products. Our robust R&D process focuses on processmodification enhancing overall product quality.
Eight-eleven and its impact on us (Demonetisation)
For a company that generates substantial revenues from semi urban and rural India itwould have been reasonable to believe that the demonetisation would a3ect our revenues.Even as much of India saw the demonetisation as a threat we considered 8/11 as anopportunity for innovation and better market outreach. Some of the initiatives weundertook to overcome demonetisation included the launch of smaller SKUs and superiorsupply chain integration; even as there was some downtrading there was little shift inproduct loyalty. The reality was that Brand Jyothy rose to the challenge during thisenvironment. Our net sales increased by 3.1% during the third quarter of the year underreview when compared with the corresponding quarter of the previous year EBIDTA increased2.5% and net profit grew a much sharper 12% (standalone). We have always professed thatbuilding trust-based consumer relationships will lead us to success not just in numbersbut in terms of enriched value. We believe in coordinating with di3erent functionsintegrating the company's core virtues into the system strengthening the emotionalconnect and reinforcing the distributor-sta3-organization relationship.
Projecting the future
At Jyothy it would have been relatively easy to predict the future. Rather we engagein the more challenging task of projecting it. Our strong ear-on-the-ground approachenables us to gauge consumption insights first-hand which we translate intoproductisation that results in a strong solutions-driven proposition.
Specifically during the year 2016-17 with a view to take advantage of the Northeastas a large and relatively untapped geography we invested in setting up three proximatemanufacturing facilities in Assam for the manufacture of Ujala Margo and Maxo liquid thefull impact of which will be reflected in 2017-18. These facilities also possessmulti-year tax and fiscal benefits. The proposed implementation of the Goods and ServicesTax (GST) will have a positive outlook on the consumption sector; we foresee theunorganized sector vacating market share in favour of the organized FMCG industry. Forfrontline players like Jyothy consumption tailwinds will not only be reflected in organicsectoral growth but also increase market share transfer to the organized sector of whichwe expect to emerge as an important beneficiary. For us winning in the marketplace meansmaking the world a better place. At our Company we have demonstrated a proven model; wedesire to make a di3erence to consumer lives. We have a world-class team and we haveimportant work to do. I am looking forward to all that we have targeted to accomplish in2017-18.