Jyothy Labs plans to enter the billion-dollar club

Jyothy Laboratories, which moved to the big league of fast moving consumer goods (FMCG) companies with its Rs 600-crore acquisition of Henkel India in 2011, now eyes to become a billion-dollar company (about Rs 5,500 crore) by 2016.

According to Ullas Kamath, joint managing director of Jyothy Laboratories, the first priority of the company is to turn around acquired brands, which would help the company hit the billion-dollar mark.

The other factor that will help the company achieve the target is its flagship brand, Rs 300-crore Ujala, which according to Kamath will grow to become a Rs 1,000-crore brand by 2016. “Ujala is already having the lion’s share in the fabric care market,” said Kamath.

Also, Jyothy Laboratories will open a subsidiary in Bangladesh -- Jyothy Kallol Bangladesh -- in April 2013. This will boost its export revenues. “The subsidiary is set up with Bangladesh’s leading FMCG distributor Kallol Enterprises and we hold 75 per cent stake in the subsidiary,” said Kamath.

“We are concentrating on our existing business and trying to reposition the acquired Henkel brands. The plan is to integrate and put our theories in place by turning these products successful,” said Kamath.

Jyothy has been working on streamlining the production, distribution and marketing, as well as reducing its debt of around Rs 550 crore. . Out of which, Rs 450 crore in the term loan and rest is working capital.

However, Kamath ruled out any private equity placement in the near future. “We are not in a hurry, our existing capacity is good enough for the next three years, so we don’t require any additional funds for expanding our operations.”

Jyothy has 28 factories, and two additional manufacturing units of Henkel in Tamil Nadu, which have been pressed into service to produce its brands ranging from Ujala to Maxo, Exo, Mr White, Henko, Chek, Margo, Pril, Neem and Fa.

According to Kamath, Margo will be one of the key brands that will be repositioned for a nationwide rollout. “It is a well known brand, but it has a strong base in the east and south. People across the country know about it, but availability of this 95-year-old brand is an issue. So, a lot of work will be done towards that,” said Kamath.

The Bangladesh subsidiary has invested around Rs 12 crore in the new factory. Local manufacturing of Jyothy’s products will ramp up the company’s presence in Bangladesh. “We should be clocking in Rs 100 crore from Bangladesh in the next two years,” said Kamath. According to him, the Bangladesh foray will determine Jyothy’s future overseas plans.

Through the Bangladesh subsidiary, Kamath plans to roll out the Henkel brands, which already have a strong brand equity in the Bangladesh market.

Currently, Jyothy Labs exports its products to neighbouring countries such as Bangladesh and Malaysia, and also to West Asia. Overall exports contribute around 3 per cent of the company’s turnover, which is around Rs 1,300 crore.

Going forward, Jyothy Labs plans to maintain a top line growth of over 25 per cent over the next two to three years.