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JHS Svendgaard Laboratories Ltd Management Discussions

11.4
(1.79%)
Oct 8, 2025|12:00:00 AM

JHS Svendgaard Laboratories Ltd Share Price Management Discussions

FORWARD-LOOKING STATEMENTS

This Management Discussion and Analysis (MD&A) of the financial condition and results of operations of JHS Svendgaard Laboratories Limited ("the Company") includes certain statements that are or may be deemed to be "forward-looking statements" within the meaning of applicable securities laws and regulations. These statements reflect the Companys current expectations, objectives, projections, or forecasts with respect to its future performance, business strategies, plans, and prospects.

Such forward-looking statements are based on various assumptions and expectations concerning future events, which are inherently subject to uncertainties and risks. The Company makes no assurance that these assumptions and expectations will prove to be correct or that anticipated results will be achieved.

Actual results, performance, or achievements could differ materially from those expressed or implied in any forwardlooking statements due to various factors, including but not limited to changes in applicable laws and regulations (including tax and regulatory policies), macroeconomic conditions, industry trends, market dynamics, foreign exchange fluctuations, technological developments, and other domestic and global factors beyond the Companys control.

The Company undertakes no obligation to publicly update, revise, or amend any forward-looking statements, whether as a result of new information, future events, or otherwise, unless required by law.

The financial statements have been prepared in accordance with the historical cost convention, on an accrual basis of accounting, and in compliance with the provisions of the Companies Act, 2013 and the applicable Accounting Standards as notified under the Act. The management has exercised prudent and reasonable judgment in the use of estimates and assumptions to ensure that the financial statements present a true and fair view of the Companys state of affairs and financial performance for the year.

The following discussion and analysis should be read in conjunction with the audited consolidated financial statements of the Company and the accompanying notes thereto, as disclosed in this Annual Report. Unless the context otherwise requires, all references to "we", "us", "our", "the Company", "JHS", or "JHS Svendgaard" refer to JHS Svendgaard Laboratories Limited.

ECONOMIC OVERVIEW Global Oral Care Industry

The global oral care industry is poised for robust growth in 2024 and beyond, driven by heightened consumer awareness around oral hygiene and the increasing adoption of technologically advanced and sustainable products. According to Mordor Intelligence, the global oral care market is projected to grow at a CAGR of 6.32% during the forecast period 2024-2029.

The Asia-Pacific region remains the largest contributor to the global oral care market, owing to its large and ageing population, particularly in countries such as India, China, and Japan. As per Precedence Research, the Asia-Pacific oral care market was valued at USD 18.78 billion in 2023, and is expected to reach USD 33.12 billion by 2033, growing at a CAGR of 5.8% during 2024-2033. Increasing disposable incomes and improved living standards in emerging economies are further propelling market expansion.

Meanwhile, North America is anticipated to be the fastest- growing market, with an expected CAGR of 6.2% between 2024 and 2033, driven by the rising incidence of oral health issues and a growing shift toward herbal and natural oral care products.

Technological innovation is a key growth driver in the global oral care industry. Companies are investing in eco-friendly packaging (e.g., recyclable toothpaste tubes) and smart oral care devices such as app-connected toothbrushes to cater to evolving consumer expectations.

Sources: Mordor Intelligence, Precedence Research, Yahoo Finance

Indian Oral Care Industry

The global oral care market was valued at about USD 37.8 billion in 2024 and is projected to reach USD 54 billion by 2030 at 6.2-6.4% CAGR. Growth is driven by consumer awareness, ecofriendly packaging innovations, and digital health tools such as app-connected toothbrushes.

Indias oral care market was USD 2.8-3.2 billion in 2024 and is expected to reach USD 4.6-5.0 billion by 2030 (7.9-8.7% CAGR). Key drivers include higher awareness, premiumization, and government initiatives

The toothpaste segment dominates the market, accounting for over 60% of total revenue, followed by the toothbrush segment. Other emerging segments include mouthwash and dental floss. Leading players in the Indian market include Colgate-Palmolive, Dabur India, Patanjali Ayurved, Himalaya Wellness, Unilever, Vicco Laboratories, Baidyanath Ayurveda, and Procter & Gamble.

India faces significant oral health challenges: approximately 85-90% of adults and 60-80% of children suffer from dental caries, while around 30% of children have misaligned jaws or teeth. Alarmingly, over 50% of those affected do not seek professional dental care.

KEY MARKET GROWTH DRIVERS IN INDIA

• Rising Awareness: Efforts by organizations such as theIndian Dental Association and government campaigns are increasing awareness of the importance of oral hygiene. However, only around 50% of Indians brush twice a day, suggesting significant growth potential.

• Increasing Disposable Income: Indias per capita income rose from USD 1,670 in 2010 to USD 2,020 in 2020 (World Bank), leading to rising demand for premium oral care products and services.

• High Disease Burden: As per the Indian Council of Medical Research, over 80% of the population is affected by dental issues, boosting demand for therapeutic oral care products.

• Urbanization: Urban population is projected to increase from 34% in 2018 to 56% by 2050, driving demand for oral care products due to better awareness and access to dental services.

• Government Initiatives: Programs like the National Oral Health Programme (2014) aim to improve oral health outcomes and access to dental care, offering growth opportunities for the industry.

ABOUT JHS SVENDGAARD LABORATORIES LIMITED

JHS Svendgaard Laboratories Limited is a leading contract manufacturer of toothbrushes, toothpastes, mouthwashes, and other oral care products. The Company operates on a private-label model, partnering with brands such as Dabur, Patanjali, Amway, Reliance Consumer Products, and Jyothy Labs. It entered the United States through Orazen Inc. and reentered Middle Eastern markets via Classico Brands.

Marking a significant milestone in its corporate journey, the Company was listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) on October 21, 2006, at an issue price of Rs.58.00 per equity share.

Evolution and Capabilities

Starting with the manufacturing of toothbrushes, JHS has progressively diversified its product portfolio to include toothpastes, mouthwash, whitening gels, and denture tablets. Today, JHS is one of Indias leading integrated oral care product manufacturers and exporters, serving both domestic and international markets.

The Company operates on a contract manufacturing model, offering end-to-end manufacturing partnerships to some of the most trusted and established brands.

JHS operates multiple state-of-the-art manufacturing facilities in Kala-Amb, Himachal Pradesh, with fully integrated capabilities for both toothbrush and toothpaste production. The Company employs a team of over 263 highly skilled managers, engineers, officers, and supervisors, ensuring operational excellence.

Emphasizing the value of Human Resource Development, JHS ensures the availability of all statutory welfare, safety, and recreational facilities across its premises. The Company promotes a culture of professionalism, efficiency, and continuous learning.

Technology and R&D

JHS is backed by a strong in-house Research & Development (R&D) division, which continuously focuses on innovation, customization, and quality improvement. This R&D capability supports the Companys commitment to delivering high- performance products that meet international standards.

To maintain stringent quality control, JHS has a fully equipped Quality Control laboratory, alongside advanced manufacturing equipment sourced from global leaders, such as:

• Vertical & Injection Moulding Machines - Demag and Cincinnati

• Tufting & Trimming Machines - Zahoransky GmbH, Germany

• Blister Packing Machines - Boucherie, Belgium

The Company also boasts complete in-house production capabilities, covering the entire value chain - from injection moulding and bristling to packaging - all under one roof.

Certifications and Compliance

JHS Svendgaard Laboratories Limited adheres to the highest standards of quality and compliance. The Company holds certifications including:

• ISO 9001

• ISO 13485

• FDA

• GMP (Good Manufacturing Practices)

• AAYUSH Certificate

These accreditations reflect the Companys robust systems and commitment to global quality, environmental, and ethical benchmarks.

Market Position

JHS has emerged as Indias largest integrated manufacturer of oral care products, acting as a proxy for the Indian oral care industry. With its ability to combine mechanical and chemical manufacturing competencies within a single campus, JHS offers a one-stop solution for both B2B brands and export clientele.

The Companys growth and achievements have been recognized through various awards and accolades, further affirming its leadership position in the oral care manufacturing space.

FINANCIAL OVERVIEW

The performance of the Company for the financial year ended March 31st, 2025, is as follows:

(Rs. in Lakhs)

Particulars

As on 31 March, 2025 As on 31 March, 2024

Revenue from operations

9,199.73 7,079.82

Other income

287.71 431.44

Total income

9,487.44 7,511.26

Profit before exceptional items and tax

(964.23) (342.15)

Profit before tax

(1,250.17) (342.15)

Tax expense

723.67 62.91

Profit for the year

(1,973.84) (405.06)

Revenue from operations increased from Rs. 7079.82 Lakhs in FY 2023-24 to Rs. 9199.73 Lakhs in FY 2024-25 (30% YoY growth). Loss after tax stood at Rs. 1973.84 Lakhs, reflecting one-off provisions and exceptional expenses. Segmental revenue: Toothbrushes 60.7%, Toothpastes 30.2%, Talcum 5.1%, Others 4.0%.

RESOURCES AND LIQUIDITY

As on March 31, 2025, the net worth stood at Rs. 17,313.24 lakhs and the debt were at Rs. 514.27 lakhs. The cash and cash equivalents at the end of March 31, 2024 were Rs. 672.18 lakhs.

SEGMENT WISE BUSINESS PERFORMANCE

The Company is into manufacturing toothpaste, toothbrushes, Talcum etc. Revenue share broad segments are stated below:

Name of the product

% of total turnover of the
Company

Toothbrushes

60.70%

Toothpastes

30.22%

Talcum

5.10%

Others

3.98%

RISKS AND CONCERNS

Like any business, JHS Svendgaard Laboratories Limited is exposed to a variety of internal and external risks in the course of its operations and in pursuit of its strategic goals. The Company has a comprehensive Risk Management Policy and conducts periodic risk workshops for each business vertical and support function to identify, assess, and mitigate risks within its defined risk appetite. Risk Registers are maintained and reviewed regularly to ensure timely action and risk preparedness.

Key Risks Identified:

• Credit Risk: The Company faces credit risk arising from

delayed customer payments. To mitigate this, a formal credit policy is in place that includes credit limit approvals and due diligence procedures. Prior to engaging with clients, the Company conducts independent financial assessments. A streamlined receivables management process ensures timely follow-ups and collection efforts.

• Interest Rate Risk: The Company follows a conservative financial strategy and maintains a relatively low level of debt. While it is not entirely debt-free and currently has certain term loans and working capital borrowings, the overall debt exposure remains limited. This prudent approach has helped contain the interest burden and manage the Companys exposure to interest rate fluctuations effectively.

• Competition Risk: The Company operates in a competitive landscape with both domestic and multinational players. However, its strong focus on quality, timely delivery, infrastructure, customer-specific solutions, and a diversified client base has helped mitigate this risk. Continued investment in technology and human resources ensures competitiveness and resilience.

• Input Cost Risk: Fluctuations in prices of raw materials, utilities, and manpower can affect profitability. However, the Company operates on a cost-plus model with several clients, enabling partial pass-through of such costs. Key input risks like power tariffs and workforce expenses are closely monitored and managed.

• Liability Risk: This includes the risk of damage to equipment, life, or third-party assets that may result in financial or legal exposure. The Company mitigates this risk through appropriate insurance coverage, robust contractual frameworks, and compliance protocols.

• Inventory Risk: Efficient inventory management is critical. Low inventory levels may result in stockouts, impacting customer satisfaction and sales. Conversely, excess inventory may signal overproduction or slow-moving stock. The Company maintains optimal inventory levels supported by a demand-driven planning approach.

OPPORTUNITIES

The oral care industry is undergoing significant transformation, presenting various growth avenues for JHS Svendgaard:

• Hygiene Awareness Post-COVID-19: The pandemic has led to an increased demand for personal hygiene and oral care products such as liquid handwashes, sanitizers, and bar soaps.

• Government and MNC Initiatives: Major FMCG players are collaborating with the Indian government to promote affordability and access to hygiene essentials, indirectly boosting the market ecosystem.

• Changing Consumer Preferences: Modern consumers seek value-added oral care solutions with superior quality and appealing design. This is driving demand for personalized, sustainable, and aesthetic oral hygiene products.

• Growth in E-commerce: With rising digital adoption, online platforms are becoming key distribution channels. Oral care products are witnessing strong traction on e- commerce sites, prompting further investments in digital sales infrastructure.

• Rising Oral Health Issues: Increasing incidence of dental conditions such as tooth decay, gum diseases, and oral trauma is expected to fuel product demand. Growing awareness of oral aesthetics is also driving consumption of teeth whitening and premium care products.

• Sustainability Trends: Government regulations banning plastic usage in oral care products are encouraging companies to adopt sustainable packaging and biodegradable materials, offering opportunities for differentiation.

• Retail Infrastructure & Healthcare Expansion: Growth in retail networks and organized pharmacy chains is enhancing product visibility and availability, positively impacting market penetration.

THREATS

Despite strong fundamentals, the Company remains vigilant to the following external threats:

• Rising Competition: Increased market entry by domestic and global players, including in-house manufacturing by brands with high liquidity.

• Execution Risk: Any delay or inefficiency in order fulfilment or product rollout can affect customer satisfaction and brand reputation.

• Regulatory Uncertainty: Changes in government policies, tax laws, environmental regulations, and labor laws can impact operational and financial planning.

• Technological Disruption: Emergence of newer technologies and materials may make existing processes obsolete. Continuous R&D is essential to stay relevant.

• Input Cost Volatility: High dependency on raw material availability and price fluctuations may impact margins, especially in price-sensitive segments.

• Talent Management: Attracting and retaining skilled talent remains a challenge in a competitive labor market. Employee engagement and training are key focus areas.

• Dominance of Unorganized Sector: Presence of unorganized and local players offering low-priced products may impact volume growth and price realization.

• Affordability Barrier for Premium Products: High cost of advanced or cosmetic oral care items may limit penetration in lower-income segments, affecting market expansion.

INTERNAL CONTROL SYSTEMS AND ADEQUACY

JHS Svendgaard Laboratories Limited has established a robust and comprehensive system of internal controls to safeguard its assets, ensure operational efficiency, and maintain the integrity of its financial reporting. These controls are designed to prevent unauthorized use or disposition of assets and ensure that all transactions are properly authorized, recorded, and reported in compliance with applicable laws and regulations.

The Companys internal control framework is aligned with the requirements of the Companies Act, 2013, SEBI (LODR) Regulations, and other applicable statutory and regulatory frameworks, including labor laws, tax laws, and corporate governance guidelines.

Key Features of the Internal Control System:

• Asset Safeguarding: Proper mechanisms are in place to ensure that all physical and intangible assets of the Company are secured against loss, damage, or misuse.

• Operational Efficiency: Internal controls are designed to promote optimal and effective utilization of resources, ensuring process efficiency and cost-effectiveness across departments.

• Regulatory Compliance: The system ensures adherence to all applicable laws, regulations, and guidelines issued by regulatory authorities, including SEBI, stock exchanges, and the Ministry of Corporate Affairs.

• Financial Management: Policies and Standard Operating Procedures (SOPs) are established for budgeting, capital expenditure control, accounting, financial reporting, and investments, with the objective of improving financial governance.

• Information Flow and Decision-Making: Structured processes facilitate accurate and timely information flow, enabling management to make informed and prompt business decisions.

• Internal Audit Framework: The Company has a dedicated Internal Audit Department, which functions independently and reports directly to the Audit Committee of the Board. Internal audits are conducted at regular intervals to assess the adequacy and effectiveness of internal controls across operational, financial, and compliance areas.

• Review Mechanism: Regular monthly business reviews are conducted as part of operational controls, where performance metrics are assessed, variances are analyzed, and corrective actions are initiated as required.

• Capital Expenditure Controls: A structured authorization system governs capital investments. Projects and asset acquisitions are subject to pre-approval and postimplementation reviews to ensure accountability and budgetary discipline.

• Audit Committee Oversight: The Audit Committee, in coordination with the senior management team, is kept informed of internal audit observations and the status of corrective actions. The Committee reviews quarterly, halfyearly, and annual financial statements and oversees the implementation of internal control recommendations.

• Internal Financial Control (IFC) Assessment: During the year under review, a comprehensive assessment of the Companys Internal Financial Controls was carried out. The evaluation confirmed that the existing controls are adequate and operating effectively. Recommendations for improvement, wherever suggested, are being proactively implemented.

• Continuous Improvements: The Company continually updates its policies and SOPs to keep pace with evolving business processes, technological changes, and compliance requirements.

KEY FINANCIAL RATIOS

Details of changes in key financial ratios as compared to immediate previous financial year.

Particulars

2024-25 2023-24 Variance

Reason for Change if change is 25% or more

Debtors Turnover

-3.92 2.36 -266%

The negative impact in the ratio is due to exceptional and non-recurring expenses /provisions that have been accounted for during the Current Year.

Inventory Turnover

4.98 3.44 45%

Higher turnover ratio is on account of reduction in inventory at the end of financial year after netting off the provision for obsolete and non-moving inventory.

Interest Coverage Ratio

-16.57 -6.44 157%

The decline in the Interest Coverage Ratio is primarily attributable to extraordinary expenses recognized during the year. Nevertheless, the company continues to demonstrate strong liquidity, as reflected in its healthy liquidity ratios

Current Ratio

2.18 1.86 17%

NA

Debt Equity Ratio

0.01 0.01 17%

NA

Operating Profit Margin (%)

-9.85% -4.18% 136%

The reduction in Operating Profit Margin reflects the impact of certain one- off, non-operational expenses incurred during the year.

Net Profit Margin (%)

-20.68% -5.39% 284%

The dip in Net Profit Margin is attributable to exceptional, non-recurring expenses during the year, and does not reflect the underlying operational performance.

HUMAN RESOURCES

The Companys HR philosophy is to establish and build a high performing organization, where each individual is motivated to perform to the fullest capacity, to contribute to developing and achieving individual excellence and departmental objectives and continuously improve performance to realize the full potential of our personnel. As on March 31, 2025 Company is giving employment to 263 permanent employees. Industrial relations are cordial and satisfactory.

Employees are critical to our business. The Company internally assess its employees to periodically identify competency gaps and use development inputs (such as skill up gradation training) to address these gaps. The Company has implemented staff training policies and assessment procedures and intend to continue placing emphasis on attracting and retaining motivated employees.

The Company also plans to continue investing in training programmes and other resources that enhance employees skills and productivity which will continue to help our employees develop understanding of the customer-oriented corporate culture and service quality standards to enable them to continue to meet the customers changing needs and preferences.

Our deep understanding of local needs and our ability to adapt quickly to changing consumer preferences has helped our performance driven growth. Our robust IT systems have significantly aided this growth by simplifying complex processes throughout our operations.

Our IT systems are equipped with an array of data management tools specific to our business needs and support key aspects of our business. This implementation has contributed positively towards minimizing product shortage, pilferage, out of stock situations etc. and has increased overall operational efficiency.

KEY HIGHLIGHTS & ACHIEVEMENTS

Major accomplishments, milestones, or noteworthy initiatives:-

1. Major Accomplishments -:

¦ In the Export Market we entered USA, with Orazen INC (Somerset, New Jersy). Product Name - PEPSODENT Tripple Action, in Soft, Medium & Hard Variants.

¦ Sales materialized in Dubai to "Classico Brands", Product Name - Inglish Popular Flexi.

2. Milestones -:

¦ Annual Sale grew by 30% from FY2023-24 to FY2024- 25, as we crossed the figure of 92 Cr. In this financial year.

3. Noteworthy Initiatives:

¦ CMPL 2024 Mumbai Edition Participation: To help increase business, brand awareness & networking.

¦ COSMOPROF 2024 - Participation in the Expo to understand diversifying our product line to other personal care products.

¦ Private Label Middle East 2024 Dubai Expo - Participated in this Expo to understand international market for private label & OEM industry players.

¦ CPHI Expo Noida 2024 - Participated in this expo to understand Pharma & its related products for oral care OEM Business.

4. Performance Summary

a. Key metrics, targets achieved, YoY comparisons

i. Key Metrics -:

¦ FY 2024-25 Q1 Sales - 24.48 Cr.

¦ FY 2024-25 Q2 Sales - 19.68 Cr.

¦ FY 2024-25 Q3 Sales - 22.65 Cr.

¦ FY 2024-25 Q4 Sales - 25.17 Cr.

ii. Y-o-Y Comparisons: Sale grew by 30% from FY2023- 24 TO FY2024-25.

5. Operational improvements or major challenges addressed-

¦ Marketing Teams extensive involvement in operations to help streamline the production & dispatch function to keep customers satisfied.

6. Strategic Projects & Developments

¦ New product lines or services added

o Talcum has been a major factor in financial year 202425. We have increased capacity from 3,000 units to 10,000 units with existing capacity. Further increase is also on the cards in 2nd half of 2025.

¦ Investments, capacity expansions, automation initiatives, etc.

OUTLOOK

The Company remains focused on expanding in domestic and global markets, strengthening R&D, and adopting sustainable packaging. Indias oral care demand (8% CAGR to 2030) and growing e-commerce penetration provide significant opportunities.

As we move into the financial year 2025-2026, JHS Svendgaard Laboratories Limited is focused on strengthening its market presence, diversifying its product portfolio, and expanding its reach in both domestic and international markets. The Company remains committed to driving growth through strategic planning, operational discipline, and continuous improvement.

In line with our expansion strategy, we are exploring strategic partnerships and alliances that align with our business objectives. These collaborations will help us tap into new regions across India, serve wider customer segments, and enhance our competitive edge.

We are also taking clear steps toward international growth, including efforts to obtain necessary global certifications and meet regulatory requirements in key markets. Alongside this, we are evaluating multiple distribution channels to effectively introduce our oral care products to global consumers and broaden our revenue base.

JHS continues to invest in innovation, product development, and infrastructure, backed by our focus on quality and customer satisfaction. These efforts will support long-term value creation and business sustainability.

We thank all our stakeholders—shareholders, employees, partners, and customers—for their ongoing trust and support. With a clear vision and focused execution, we look forward to a year of meaningful progress and growth.

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