Dear Valued Owners
I would limit writing about Covid-19 and its impact to a reduced space since thepandemic did not affect our operations till March of the fiscal year.
There is a theory called the Big Push developed by a Polish-American economist P NRosenstein-Rodan that basically talks about the need to have a big effort by thegovernment to overcome obstacles to economic growth and that tepid interventions have noimpact. This theory could very well apply to strategy and execution methods deployed byorganizations. Most companies do not have a focus on getting a few things right and rathermeekly attempt to do many things. In the process the organizations neither gain expertisenor scale.
In your company we are focused on growing our pain health beverage and women's hygieneportfolio. When one considers the ageing populations prevalence of stress related achesand pains increasing lifestyle of exercise fitness and sports activities the seculargrowth of certain OTC categories can continue well into the future; provided organizationsexecute by designing and offering products that are relevant to today's consumers.
Here your company has an opportunity with the range of Roll On's sprays andtransdermal medication products that are planned for the near future. The women's hygienecategory is also very promising considering Indian women use 1/5th the pads of Chinesecounterparts and progressively in some cases also are experimenting with devices liketampons and menstrual cups. The modern woman of India from rural to urban is verydiscriminating in terms of how she manages her health and is no longer relying just on theadvice of her parents or doctors. This is why we are working on launching an App aroundthe Comfy brand which would help women track her periods read about menstrual andfeminine health and even order Comfy range of sanitary napkin and related products fromthe comfort of her home.
Keeping in line with the strategies mentioned in past letters in this space wecontinue to focus on building distribution for our brands with the M5K planthat targets a vision of appointing 5000 distributor and sub distributors. This past yearwe have appointed 974 distributors and sub distributors. We have improved our directcoverage from 3953 to 4510 towns as this would drive our vision to grow distribution ofour range of products to regions in Western and Northern zones where our business isrelatively weak.
We are also investing in digitization in a big way by building on the sales forceautomation project that was rolled out a couple of years ago by building a data dash boardthat seamlessly integrates data flow from various sources (ERP sales force automationapp etc) in order for managers to get relevant usable data at their finger tips. Part ofthe digitization drive is also to offer all our products for sale on our corporatewebsite. Our products are available currently online at Amazon Pharmeasy Netmeds Apolloand other consumer sites. (We also sell on Amazon's B2B site and plans are to enterStoreking and ShopX).
The black swan pandemic event that arrived via the Covid-19 virus in March of this yearhas disrupted go -to -market and stopped movement of goods to both the distributor andalso to retailers and end consumers. The hit to sales in March was to the tune of Rs.33cr. Some of the salient points of the year.
Top line of the group grew from Rs.281.31cr to Rs.288.92cr
Loss of revenue to top line was Rs.33 cr in March due to Covid-19
Potential sales without impact of Covid -19 would be Rs.321.92 cr with a revenuegrowth of 14.44%
Comfy revenue was Rs.40 cr compared to Rs.35 cr the previous year
Headache Roll On revenue was Rs.26 cr compared to Rs.21 cr the previous year
The Modern trade channel generated revenue of Rs.25 cr
E commerce sales are Rs.1.6cr - We wish to target 1.3% of National sales from Ecommerce in FY 21. E commerce currently contributes to 0.5%.
In spite of the Covid-19 related disruption we managed to maintain profits withPAT at Rs.25.08cr compared to Rs.24.51cr the previous year.
We continue to be a free cash flow generating business deploying prudent capitalallocation methods that result in cash reserves in excess of 100 cr and no debt. This hashelped us weather the disruptions to our business from the pandemic.
Consumer led growth built on pillars of operational excellence and executionculture is our guiding principle.
Execution culture by focusing on doing what matters
We are confident of weathering the storm as we have built a business on strongfundamentals with real consumer demand. Further our products are not of discretionarynature but of essential needs- pain ointments sanitary napkins rehydration drinks forpost illness recovery.
The pandemic has made Boards and management rethink the role of an organization. Is itmerely to generate economic returns for the shareholders or is it also responsible toother stakeholders? We know the origins of Covid-19 lie in wet farms of China and sciencehas also proven the ill effects of global warming. What kind of world do we leave ourfuture generations if we as corporate citizens do not play our part in balancing economicgrowth and the needs of all stakeholders-employees society in which we operate and alsothe environment?
Your company believes in the broader vision and not just the short term economic one.You can read more about our commitment to the larger society and environment and employeesin the Business Responsibility section of the Annual Report.
|S. Sambhu Prasad |