11 April 2018
Interaction with the CEO
Brightening the portfolio…
…valuations remain fair, though
We met Mr. Ullas Kamath, Joint Managing Director of Jyothy Laboratories (JYL), to understand
the company’s strategy to drive growth over the next few years. Key takeaways:
Multiple drivers in place to drive medium-term growth
1. Ujala Crisp and Shine:
This product fits well into JYL’s niche and innovative product
portfolio. It was launched initially in Kerala, with the potential to reach a customer
Mr Ullas Kamath
Joint Managing Director
base of over 30m people. JYL initially targets to make
Ujala Crisp and Shine
INR1b sales product in south India, and then take the brand to other states – but
Mr Ullas Kamath is a
one state at a time. It targets a turnover of INR2.5b from this brand over 4-5 years.
2. Personal care:
JYL aims to step up its presence in the Ayurveda space with its
Accountant and Company
Secretary. He has topped it
(both acquired from Henkel’s portfolio).
with a Degree in Law and
around 1m outlets, mostly in east and south India. Encouragingly, the recent
has attended the Advanced
have able to create good top-of-mind awareness. Over
Management Programme at
the last four years, JYL has grown Margo from an INR600m to an INR2b brand. JYL
Wharton Business School
aims to generate revenue of INR5b from its personal care portfolio (Margo +
and Harvard Business
– a product that is at a premium to
Colgate Dental cream,
but generating revenue
of only INR300m, half of which are from exports to Malaysia).
Under his leadership, the
expected to contribute INR3b of sales over the next 2-3 years. Its positioning is
company has diversified and
unique with 15% of the ingredients comprising of neem oil, a level that has been
become a multi-product
FMCG company. He has
maintained across its history. Management is looking at extending the Margo
spearheaded the successful
franchise to face wash and hand wash.
commands 55-60% gross margins,
setting up of Fabric Spa and
which will only expand as JYL enters more premium products. In fact,
the Henkel acquisition. He
management’s targets at least 50% gross margins from all of its new products
has also won the CA
Business Achiever Award -
SME category – at ICAI
3. Hair care:
JYL is still in the R&D phase in its hair care segment. It will be looking at
the premium hair oil space first, with a product similar to peer brand
4. Dishwash brands (Exo and
JYL is the number-2 player in the
INR105b dishwash market, which is growing at ~8%. The company sees a huge market share-led growth
opportunity, given the significant market share gap between the market leader (HUL) and JYL. The company
aims to increase its share from 12% now to 15% in the near term, and eventual reach 20% in the next five years.
The brand enjoys a 60% market share in Kerala, 35% in Karnataka, 22% in Tamil Nadu (TN) and 20% in Andhra
Pradesh (AP). JYL aims to build its overall market share by growing its presence in TN and AP to begin with. The
category is also premiumizing from low-quality powder to dish wash cakes and from cakes to liquids. JYL has
which is a strong brand in the liquid dish wash segment. The company is extending
into the premium end of
the dishwash cake segment, and
from dishwash cakes to lower-end liquids.
After regaining the lost market share in the household insecticides business,
is expected to do
better in the coming years, led by government initiatives (such as Swachh Bharat) and lower competitive
(Reckitt) has not been doing well in the market, as is the case globally.
(SC Johnson) has
also lost focus on liquids. Both these brands are losing share to
is very strong in south India and
in east India.
(Krishnan.Sambamoorthy@motilaloswal.com); +91 22 6129 1545
(Vishal.Punmiya@motilaloswal.com); +91 22 6129 1547
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Investors are advised to refer through important disclosures made at the last page of the Research Report.