Ladies and gentlemen, good day and welcome to Jyothy Labs Q2 FY25 conference call hosted by ICICI Securities. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Manoj Menon from ICICI Securities. Thank you, and over to you, sir. Hi, everyone. A wonderful greetings to all of you. Representing ISEC, it's our absolute pleasure once again to host the management of Jyothy Labs Limited for the research conference call. Over to Madam M.R. Jyothy for the initial remarks, post which we'll open the floor for Q&A. Thank you. Thank you, Manoj. Good afternoon, everyone. A warm welcome to the Jyothy Labs conference call to discuss our financial performance of Q2 FY25. The complete results and investor presentation are available on both our company website and the stock exchange. I hope everyone had a chance to look at it. For the quarter ending September 30, 2024, our consolidated sales reached INR 734 crores, a 0.2% in value and 3% in volume growth, against a base of 11% value growth in the same period last year. In the current quarter, the variance between value and volume growth is primarily due to increased grammages and select SKU price cuts. We have seen an improvement in rural demand, accompanied by robust growth in our e-commerce and quick commerce channels. Our gross margin for the quarter stands at 50.2% compared to 49.2% same period last year, with palm oil prices remaining an exception to the otherwise stable raw and packing material costs. We anticipate some price increase in these four categories in quarter three. Advertising and promotional spending was 8.3% for the quarter, an increase of 6.4% over the same period last year. Despite softer consumer demand and seasonal impacts, we remain focused on ensuring strong brand visibility. Our operating EBITDA is at 18.9% compared to 18.5% in the same quarter last year, with a PAT of INR 105 crores. For the half-year, revenue reached INR 1,476 crores, an increase of 4%, and 7% in volume, with a gross margin of 50.7%. The operating EBITDA margin for the half-year is 18.4%, an increase of 7.6% from the same period last year. We are maintaining nine days of operating working capital and remain debt-free. With a strong cash reserve of INR 659 crores, following a dividend payout of INR 128 crores, we are well positioned for future growth initiatives. We continue to place strong focus on our post-wash products. Ujala Supreme, the main lead in this segment, was well supported by a pan-India multimedia campaign. Additionally, partnerships in key markets with landmark events such as Pandharpur Yatra in Maharashtra and the Puri Rath Yatra in Odisha have shown impressive consumer engagement. We have roped in the talented Vidya Balan as the new brand ambassador for Ujala Supreme. Our latest campaign featuring her went live in October 2024. The Ujala Crisp and Shine campaign featuring Megastar Nayanthara is resonating well in the southern markets. In Kerala, our Ujala IDD detergent powder achieved a market share of 23.9% in quarter two FY24, aided by a multimedia campaign featuring superstar Manju Warrier. We have launched exclusive liquid detergent packs for the Henko brand and are continuing to actively sample in target markets. Our five-liter bulk pack of More Light liquid detergent has been well received, and we successfully introduced Mr. White liquid detergent in key markets in October 2024. We remain focused on our objective to build scale across different categories. In the dishwasher bar category, Exo reached a market share of 13.6% this quarter, with a focus on small packs yielding positive results. Multimedia campaign featuring Shilpa Shetty was sustained at optimum frequency. Meanwhile, Pril Liquid has maintained its market share at 14% with a sustained multimedia campaign starring Genelia and Riteish Deshmukh. We are committed to expanding the liquid vaporizer category with Maxo Liquid Vaporizer, experiencing strong double-digit growth this quarter compared to a category growth of 2%. It aligns with our strategy to focus more on the liquid format. Our multimedia campaign featuring Kareena Kapoor is gaining traction. Maxo Coil has seen a slight decline due to a consumer shift towards incense sticks. Our natural multimedia campaign featuring Raashii Khanna is further elevating the Margo brand, with a particular focus on Margo Neem Naturals to enhance visibility and appeal. We are leveraging digital channels and initiating consumer engagement to improve the effectiveness of our campaigns, considering the media consumption habits of our target audience. We remain focused on building our personal care portfolio by extending our product line and adding new variants. In summary, our EBITDA of 18.9% for the quarter indicates better operational efficiency. At the half-year mark, our 7% volume growth indicates that our strategic approach and initiatives can keep up the growth momentum. The growth in market share of our brands highlights the consumer trust they have built. Going forward, our strategy includes deepening our distribution network in rural markets and expanding our direct retail presence. Volume growth will be a key metric for us as we focus both on rural and urban segments through targeted innovation and a strengthened distribution network. We remain optimistic about the long-term potential for growth through premiumization and operational efficiencies. Jyothy Labs continues to focus on sustainable and profitable revenues to meet evolving consumer needs, ensuring our legacy as a household name in India. We remain steadfast in our commitment to brand investment, distribution expansion, cost optimization, and new category adoption. With this, I finish my opening remarks, and we are happy to answer any questions or clarifications you may have. Thank you for your attention. Thank you very much. We will now begin the question and answer session. Anyone who wished to ask a question may press star and one on their touch-tone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Mr. Manoj Menon from ICICI Securities. Please go ahead. Jyothy, just a top-down sort of question here. So when I take a step back and look at the last, let's say, one or two years of actual performance and commentary by many of your peer group, largest to smallest, there has been some sort of stress and demand always faced, and they used to call it out. But whereas you had managed to execute superbly and grow much faster than industry, with a market share gain trajectory. So what suddenly changed in this quarter? Is there something which you are picking up, let's say, in your sales data, or is it just completely external? So hi, Manoj. One is yes, we've been at a good growth level, at a double-digit growth level till Q1. July was not so good for us. In fact, September was at a double-digit growth. July, we saw a lot of issues in terms of floods and things like that, especially impacting South as a region for us, and South contributes around 40%. One is that, and second is the muted demand that still continues. So these are the two factors which have led to this kind of growth. Is there any regional disparities in growth, or is it general that you have seen this across everywhere? It is there across. So the consumer demand is there across, as in the muted consumer demand is there across the country. But it was also affected largely by the seasonal impacts that have happened. Understood. Anything on trade inventory or any difference in primary, secondary, some companies which you've called out? Is there anything of those aspects, or no, it's just a pure consumer issue? It's a consumer issue. Okay. Understood. And if I heard you correctly in the presentation, you have held on or gained shares, right? I mean, across the board? Yes. Okay. Understood. Thank you. I will step back into the queue about a few more. I'll come back into the queue. Thanks. Sure. Thank you. The next question is from the line of Mr. Vishal Gutka from HDFC Securities. Please go ahead. Yeah. Hi, Jyothy. My name is Vishal here. Just wanted to check, actually, for high single-digit volume growth in their home care business. Their home care is predominantly detergent plus dishwashing, which is a majority of our business. But we've been very muted. Although you highlighted some of the factors that led to subdued growth during the quarter, but is it due to more of competitive intensity, and what are you doing to recoup the market share? It seems that we have lost some market share in both the segments. So can you please highlight what are the action plans to intend to regain the lost market share? Yeah. So Vishal, one is that see, our growth, if you see last year base, it's at 11%. So that is one. Q2 is a higher quarter for us. And on top of that, we had given an 11% growth last year. And like you said, we have not lost market share. We have gained market share across segments, be it detergent or dishwash. So that is not a problem. It is the consumer demand that has somehow surprised us. So that is one. And one is the base effect. Got it. So competitive intensity don't seem that has gone up significantly. It is more or less status quo, right, with regards to competitive intensity. That factor remains more or less. Yeah. So for most of them, the bases were not as much there as last year. We have been a great performer last year up to Q1. So that base effect is there. And the other bit is we have not lost market share. In fact, we have increased market share. So that is intact. Competitive pressure has always been there. Yes, it may be up and down each quarter, but we have things ready with us to combat that. Got it. And then on new product development, so we have done in the last, I think, 12 months, if I recollected right, we had done Margo Neem Naturals and More Light liquid detergent. So if we can just give a broader perspective of what the new product launches are contributing, what is the contribution of the new product to overall Margo franchise? And more like, if you can give any color on that. And just a secondary adjacent question is that when do we see more aggression on NPDs? Because aggression, when do we see more and more launches? And a related question is that any plans of entering into newer categories like floor cleaner, toilet cleaner, air freshener, although we are present through a form of T-Shine, but we are not seeing that much of aggression in those categories. So, see, More Light detergent was launched in the first quarter. So that is yet to while we have launched, we have seen good pickups there. We have also launched the Mr. White liquid detergent in October, which is this quarter. And our Henko and Ujala IDD liquid detergents continue to do well, and they are growing at double-digit growth. So that is one. Margo Neem Naturals is also growing steady. Also, our Margo original neem as a soap is also doing well. So if you see, personal care is a negative this time on a base of 25% growth last year. So that is one. So that's one difference that you see. And going forward, yes, next year, you will see a lot of launches happening across segments. Any plans of entering in newer categories apart from these four core categories that we have? Yes, you will see that in the coming quarter. And then on margin guidance, so earlier, they had guided for 16%-17% band. Now, in the first half year, they were approximately around 18.5% number with regards to margin. So would you like to up the guidance for the entire year, or would you like to reiterate earlier guidance of 16%-17%? We would like to maintain it at 16%-17%. See, as we go, we don't know where the raw material and those prices will be. As of now, palm oil prices are at a high. So for now, we have maintained the I mean, we have grown the EBITDA margins. But whatever comes at an up, we will be investing behind our brands. Got it. And you highlighted that September has seen double-digit volume growth. So that trend is continued in the month of October as well? See, that is, October has been with a lot of festivals, if you see, this time. So hopefully, this quarter, we should see some. I wouldn't say double-digit, but maybe mid- to high-single-digit. Got it. Got it. Got it. Thank you. Thank you. That's it from me. Thank you. Thank you. The next question is from the line of Harit Kapoor from Investec. Please go ahead. Yeah. Hi, good evening. So just on this volume growth for the quarter, you mentioned that there were some disruptions in July which affected the numbers. So you're saying basically ex July, you have been able to continue at the mid to high single-digit range, and it's only kind of dropped down dramatically in July. That's the way to think about it, right? Yes. Got it. Got it. And the second thing was on the cost side. So apart from soap price increases, which I think industry is also taking, do you anticipate any pricing in the second half of the year on the balance part of the portfolio? See, yes, on soaps, you could see some price increases coming in, and across the portfolio also, as and when required, we'll be taking up prices. Got it. Got it. And to the earlier participant's question, you did speak about new launches. So you're expecting new variants/category launches this year in the second half, or you're saying that's an FY26 kind of thought process? It's a new calendar year. Launches we have. Got it. And just one more was on HUL. So when you mentioned that the 2% growth is category growth, is it? And versus that, LV growth for you has been double digits. That's what you mentioned. Yeah. Within our HI segment, our liquid vaporizer growth has been at double digits. Category growth has been low single digits. Yes. Category is at 2%. That is 2%. Perfect. Those are my questions. Thank you. Thank you. Thank you. The next question is from the line of Sonal Minhas from Prescient Capital Investment Advisors LLP. Please go ahead. Hi, this is Sonal. Thanks for taking my question. Am I audible? Yes, yes. Yes. Ma'am, I wanted to just get some subjective color on anything you've seen in terms of demand or any take that you have on general trade versus modern trade versus e-com? Anything you would want to share related to your product line, that would be great. Yeah. So demand has not been that good, I would say. And between General Trade, Modern Trade, and e-commerce, the Modern Trade, e-commerce is doing well, is better off. Okay. And general trade is relatively therefore not doing well. So is there a channel stocking issue in general trade as well? Just trying to dig a little deeper. No, no. There is no stocking issue. But generally, since GT contributes larger, so there you see muted demand, and then hence you see the sales muted. Okay. Ma'am, is it an oversimplification to say that when we talk to you, we are also looking at results of your peers and the other people, is it a good generalization to make that the industry was sitting on a high base growth for last year, and hence the kind of growth that we're seeing right now looks muted? And is there something subjective which you are picking up from your assessment of the market overall that you would want to share? Yeah. The industry has not been in great shape since last year. We have been doing well. And for us, those bases were, I mean, last three, four years have been great. And we are sitting on that base, yes. So, urban, in anything in particular which you're picking up, which is more pertinent to, let's say, why a consumer on the urban side is not buying in general, anything which you picked up from the market? Nothing like that. If you see, modern trade and e-commerce have been growing. So yeah. But yes, there is a general slowdown in the general trade across the country. Got it, ma'am. Okay. That's it from my side. I'll follow back in a bit. Thank you. Thank you. The next question is from the line of Vishal Gutka from HDFC Securities. Please go ahead. Yes. Hi, ma'am. Just one question on one of the smaller businesses that is on laundry services. So recently, I acquired one brand called Quiclo. Just wanted to understand the thought process of acquiring this brand and a longer-term prospect with regards to business, and if you can give me a picture, and if you can provide details with regards to how is the profitability for this business as of now. See, yeah. Quiclo is a small brand. It's a very, very small acquisition that was done in Hyderabad. And we have not acquired the entire business. It's only the brand that we have acquired. Along with it, the consumers. I mean, the customers that have been using, we've got that additionally. So our business has gone up to that extent. But we are at an EBITDA neutral as of now. Okay. And the long-term thought of this business, because earlier, you had scaled down the business significantly. Now, what is the business looking like with regards to the next three, five years? See, we would like to maintain it. That's all. There won't be any significant growth or that kind of plans that are there. We would be maintaining it at a breakeven. Got it. Got it. Got it. Thank you. Yeah. Thank you. Thank you. Ladies and gentlemen, participant who wish to ask question, may please press star and one. The next question is from the line of Amit Purohit from Elara. Please go ahead. Yeah, ma'am. Thank you for this opportunity. Ma'am, on dishwash, actually, just wanted to know your thoughts. I mean, this quarter has, I mean, for quite some time, for the last three quarters, we've been growing at mid single digit. Last quarter was a bit better. This quarter again. But I mean, we took some initiatives, I think, somewhere on the pouches, and we would like to drive that growth, which was that SKU was probably not pushed aggressively in the Modern Trade channel and also. What has been the trend there for us? So see, so if you see the growth for us across segments, it is a general thing. Dishwash has been fine so far. Among the, if you see fabric care growth, personal care growth, and your other HI and dishwash, they all have been at a positive growth, right? And we have maintained our market share, which also, and in Exo, we have grown the market share. In Pril, we have maintained the market share, which also means that in this competitive environment, we have done well. So that's all what I can say. Going forward, we have taken a lot of steps. Hopefully, that should result in good sales. Sure. No, I was just looking for this SKU of pouches. Has that got good acceptance in the Exo for the Exo brand? I think, if I'm not wrong, that was this corrective action was done last year or so. So, pouches more from Pril point of view, not from Exo. Okay. Okay. And how has been the response? It's been okay. It's been good. In fact, we want, and we'll concentrate on that as well going forward. That's the recruiter pack for us. So that will continue to be given focus. Okay. And ma'am, on the other expenditure side, I wanted to know what, because I mean, this quarter, we have seen a YoY decline. What would be the reasons for this? I mean, which are the cost items that have helped us to actually reduce the cost? Other expenditure. Yeah. Other expenditure. Yeah, yeah. That is general stuff which has gone down. So basically, factory alignment and other expense that happens for the factory expenses. So there's no one-off kind of thing, right? Nothing one-off, yeah. Okay. Thanks a lot. Thank you. Thank you. The next question is from the line of Karan Bhuwania from ICICI Securities. Please go ahead. I have one question. So you mentioned that modern trade e-commerce, etc., are growing faster. If you could highlight what are the growth rates for those channels? And also, if you could highlight what are the salience of modern trade e-commerce and quick commerce and how they have trended over the last, say, three to five years in terms of salience? Yeah. So that, see, modern trade e-commerce has been growing at double digits, is what I can say. I can't give the exact number. Okay. And in terms of salience, how much do they contribute to our revenues and how has they trended? Because they've been growing faster than general trade for quite some time. So how has the salience shift happened over the last three to five years? Yeah, so 6% is our overall e-commerce contribution. Karan sir, am I audible to you? Yes. Thank you. Thank you. Okay. The next question is from the line of Sonal Minhas from Prescient Capital Investment Advisors LLP. Please go ahead. Hi, ma'am. Thanks for taking my question again. I was looking at your trade receivables as of September 30, 2024, and comparing them to the same number for 2023, there seems to be kind of a rise from 175 CR of trade receivables as of September 23 to around 245 CR as we speak right now. Any subjective commentary you would want to make on this? That is increase in our institutional sales. That's all. Okay. When you mean institutional sales, you're talking modern trade, if I understand? Yes. Yes, yes. Got it. So this is cyclical? This is systemic? Just want to understand this a little bit more. No, we have maintained our working capital at nine days. So that's okay. Okay. Why was I asking? Because for the same sales that we do, because the sales is flat and the number is up, basically, trade receivables up by around, I think, around INR 75 crore same time last year. So this is kind of a significant delta, which I was asking. But has the share of modern trade significantly gone up last year versus now, or this is just one-off you're talking about? Yes, Sonal. So we are not giving any credit to our GT customers. So whatever debtor balance is there, that is related to institutional sales. So since that institutional sales is growing up, so you may see that increase in the debtor receivables by INR 50 crores, which is 9% of business, if you see. Okay. And this will remain at these levels as we go forward in the future? It will fluctuate by INR 50 crores, maybe less will be there. So sometimes what happens, some pipeline create sources there or something is there so that we have a provision. So it may drag by, I mean, it may be like just 25 minus 25 crores will be there. But that overall working capital that we are saying we will maintain in 10-12 days, we are within that only. Got it. Okay. That's it from my side. Thank you. Thank you. The next question is from the line of Mr. Manoj Menon from ICICI Securities. Please go ahead, sir. Yeah. Just before the last three, four months, we have seen that HUL announcing a project called Stratos and reducing the TFM content. And whereas Godrej has given a response in the press release last month, it seems to have two companies seem to have taken diametrically opposite stands in terms of soap formulation. Only one thing, one comment from your side. Have you done some any such projects for Margo or not? No, we have not taken any such projects, Manoj. We'll continue with what we have been doing. Okay. So secondly, there is a general perception over the years that there is a certain quantum of growth which you are able to deliver, let's say, higher than industry due to whether it is numeric distribution addition or improving productivity. So are we to assume that that still continues and this overall growth is just because of one very bad July? See, like I used to always say, we are an FMCG company and we'll continue our journey to add retail outlets. Yeah, so that will continue. But we are sitting on a huge base of retail outlets, so that difference will be there. Any additional increase in outlets will have to be carefully considered, but we are still on our journey to increase outlets, so that will happen, and the outlets that we already have, we have certain regional brands which we'll be taking and using these outlets to reach out more brands and more launches. Understood, and thank you so much and all the best. Thank you, Manoj. Thank you. Ladies and gentlemen, participants who wish to ask questions, please press star and one. The next question is from the line of Senthil from ithought pms. Please go ahead. Good evening, ma'am, and thanks for the opportunity. First question is just a clarification. You mentioned that you'll be foraying into new categories. So it will be in terms of relations with the existing categories or it will be a completely new category? If you can provide some more details on this. It could be newer categories. Okay, ma'am. So the existing distribution and sales will be compatible for the new products or will you be planning a new kind of distribution for this? No, no. We'll be using our existing channel. We have a good distribution setup and we'll be using those launches in our existing channels. Thanks, ma'am. Second question is on expanding the year-on-year presence of our main wash category. So if you can just share some insights in terms of what improvements we have seen in terms of. That is, see, we have certain brands which we are regionally present, for example, Ujala IDD, which is present in Kerala, West Bengal, and Tamil Nadu, that we would like to scale up at a national level. So that you will see step-by-step increase happening there in terms of distribution and reach. Like that, there are other brands as well which we will be taking it pan-India. Okay. Just last question on this liquid detergent as a category. We are also seeing liquid detergent in 10-piece packs and things like that. So does this increase the category relevance across the customer base? And how, so we have launched liquid detergent across all our brands. So how do you plan to take up this category? And how would it be relevant in the next three to five years for the company? See, liquid detergent is a growing category. It's growing at 40%-50%, largely from south. And now you can see those things happening across the country. We were initially in the premium segment. Now we intend to take it to all the segments because one is we are seeing good response from the consumers, and liquid detergent is here to stay. Okay. Thanks. Thanks Thanks for asking. Thank you. The next question is from the line of Chinmay from Prescient Capital. Please go ahead. Good afternoon, ma'am. A little general question from my side. So from a medium to long-term perspective, could you give some color on how do you in the sense that what does it take to stay competitive in the e-commerce or the quick commerce space compared to general trade? And is it like this part of your active strategy? Or if you could just give two to three key initiatives that you plan to undertake over a medium to long term to stay competitive, specifically in the e-commerce space? See, we've been investing behind the brands. I would say your brand should sell, your quality should sell. These are the most important and critical, whether you're in general trade, e-commerce, or wherever. So that's first main point. Second is consumers look at deals as well. So we have to be competitive that way, whichever channel that we are present on. So those are the things that will help you. Also, try and do a lot of digital activities because that's the shift that's happening in terms of media from TV largely to digital mediums. So to reach the right consumer at the right time. Okay. Got it. Thanks. Thank you. Ladies and gentlemen, participant who wish to ask question, please press star and one. The next question is from the line of Vishal from YES SECURITIES. Please go ahead. Yeah. Thank you, team, for the opportunity. Just wanted the clarification on the price hike that you have taken in soaps portfolio. If you could highlight the quantum of the price hike and when was it taken? Is it at the end of the quarter? No, we haven't taken any price hike yet. We will be taking it shortly. Yeah. Okay. So that would be executed in Q3? Q3, yes. Okay. And in terms of volume growth, so you did mention that there is pain in the market. So would it be fair to assume that even in next quarter, where you are sitting on a base of 11% volume growth, your volumes would be subdued even in Q3? Based on the trends that you have seen in the last few days or last one and a half months, what trends do we get? Yeah. So we are trying our best. We'll, I mean, somewhere be between mid-single to high-single digits. Okay, so this along with the annualization of the other pricing actions, because we are sitting on four quarters of negative realization, so that will turn positive and also along with the additional price hike that you paid, we should lead to a high single-digit kind of revenue growth is what you are seeing. There won't be much of a price hike impact as such in this quarter. We are taking price increases which will come in Q4 rather. Understood. Understood. Okay. And in terms of margins, you seem to be conservative regarding your margin guidance where you have already done almost 18.5% EBITDA margin in first half, but you have maintained a 16%-17% EBITDA margin guidance. Is it something that you think that could be because of volatile inflation that might impact your margins in the coming quarters? Or do you basically wish to spend the entire amount in terms of generating demand in the market? Yeah. So it will be a combination. I would still maintain at 16 to 17. It will be a combination of brand investment and that requires to support new launches and also a potential price hike in raw materials. Understood. Understood. Thank you. I'll get back in with you. Thank you. Thank you. The next question is from the line of Shrinarayan Mishra from Baroda BNP Paribas. Please go ahead. Good evening. Thank you for the opportunity. Am I audible? Yes. Yes. So my first question was on the new categories that we would be launching. Will there be any significant CapEx? No, not much. Okay. Okay. And so, the second question was on the HI category. So as we see, this category has degrown on a three-year CAGR basis by 10%. So I mean, how are we doing on this category? Or what is our plan to turn this around? Or I mean, what actions are we taking to beat the competition or illegal incense sticks? So some color on how we are approaching this category. See, what we have maintained in the past is what I will continue here, that our focus is on the liquid vaporizer segment. And for us, in spite of a quarter like this, we have grown in double digits in the liquid vaporizer segment. It's the coil category that is seeing a negative growth. And we have taken certain measures which you will see in the coming year. Okay. And the competition has launched a new product in LV category. Are we seeing any impact of that? No. In October. No. I would like to focus on what we are doing. We have grown heavily double digits, and we are happy with that.