Jyothy Consumer Products Ltd Merged Management Discussions

JYOTHY CONSUMER PRODUCTS LIMITED [FORMERLY KNOWN AS HENKEL INDIA LIMITED] ANNUAL REPORT 2011-2012 MANAGEMENT DISCUSSION AND ANALYSIS 1. Revenue Analysis Net Sales for the fifteen month period from 1st January, 2011 to 31st March, 2012 was Rs. 448.01 crores as against Rs. 450.17 crores for twelve month period from 1st January, 2010 to 31st December, 2010. Whereas on consolidated basis, the net sales was Rs. 527.34 crores as against Rs.533.90 crores for the previous year. Detei gents & Cleansers business was driven by Henko, Pril & Mr. White while the Body Care business was driven mainly by Fa, Margo and Neem. At the group level, the Detergents & Cleansers business accounted for Rs.363.72 crores, while Body Care business clocked Rs. 163.61 crores, contributing 69% and 31% of net sales respectively. 2. Cost Analysis Our strong performance is reflected through the comparison of the following numbers. Rs. in crores Particulars January to March (fifteen months) 31.03.2012 31.03.2011 Growth % Income Net Sales 527.34 653.11 -19% Other income 7.66 5.93 29% Total income 535.00 659.04 -19% Expenditure Decrease in stock-in-trade and work-in-progress 4.46 2.57 73% Consumption of raw materials 93.07 169.82 -45% Purchase of traded goods 203.41 187.32 9% Employee cost 38.55 45.27 -15% Other expenditure 172.57 278.55 -38% Total expenditure 512.05 683.53 -25% EBIDTA 22.95 (24.49) 194% Depreciation 7.80 7.51 4% Profit/(loss) before Exceptional items and Interest 15.14 (32.00) 147% Interest 56.02 38.17 47% Profit/(loss) before Exceptional items (40.88) (70.17) 42% Exceptional items - Sale of SKP-Hair-care Division 25.35 - Profit/(loss) before tax (15.53) (70.17) 78% Tax Expense - - Net Profit/(loss) for the period (15.53) (70.17) 78% Total cost as proportion to total income reduced from 104% of total income to 96% of total income. Although the total cost (excluding depreciation and interest) in absolute terms decreased from Rs. 683.53 crores to Rs.512.05 crores. EBIDTA Margin increased from negative 4% to positive 4%. Depreciation for the period increased from Rs. 7.51 crores to Rs. 7.80 crores. Interest cost for the period increased from Rs. 38.17 crores to Rs. 56.02 crores. Exceptional items (Sale of SKP-Hair-care Division) reflect sale of its Hair care division on Profit of Rs.25.35 crores. 3. Financial Position On consolidated basis, Trade receivables increased from Rs. 27.41 crores to Rs. 32.83 crores, inventory decreased from Rs. 55.47 crores to Rs.42.43 crores, cash and bank balance increased from Rs. 4.2 crores to Rs.9.03 crores during the period. 4. Management Responsibility Statement The Directors confirm that the financial statements are prepared and presented in conformity with the Indian Generally Accepted Accounting Principles (GAAP) . The statements complies with accounting standards notified by the Central Government of India under Section 211 (3C) of the Companies Act, 1956, other pronouncements of the Institute of Chartered Accountants of India., provision of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India (SEBI). The Management of Henkel India Ltd. accepts responsibility for the integrity and objectivity of these financial statements, as well as for estimates and judgement. The management believes that the financial statements reflect fairly the form and substance of transactions and reasonably present the Companys financial conditions and results of operations. To ensure the above, the Company has established internal control system across the organisation commensurate with its size and nature of business. The internal control manual defines detailed procedures and guidelines, authorisation and approval procedures. Periodic internal audits have been conducted to ensure that the Companys established systems, policies and procedures have been followed. The Audit Committee periodically meets the in-charge of Finance Department and Auditors to review the manner in which they are performing their responsibilities and to discuss audit programme and progress therein. The internal audit report is tabled before the audit committee and the issues, plan for implementing corrective actions and recommendation of the audit report are discussed. To ensure complete independence, Statutory Auditors, Internal Auditors/representatives of Internal Audit Department have full and free access to the members of the Audit Committee to discuss any matter of substance. M/s. CNGSN & Associates, Chartered Accountants, Chennai have audited the Financial Statements enclosed.