Jyothy Labs Ltd Management Discussions

ECONOMY OVERVIEW Global Economy

The global economy showed strong resilience in CY 2023 despite central banks raising interest rates to fight inflation. The economic activity remained robust, and the economy adapted well to changing financial conditions, leading to consistent job growth, strong consumer demand due to rising incomes, increased government spending, and higher labour force participation.

Global inflation is expected to gradually decrease from 6.8% in CY 2023 to 5.9% in CY 2024, and further to 4.5% in CY 2025. The world economy grew significantly as families in major developed countries spent their pandemic savings, even with central banks increasing interest rates to control inflation. The global economy is estimated to grow by 3.2% in CY 2023, with this growth rate likely to continue through CY 2024 and CY 2025. However, several factors, including high borrowing costs, reduced fiscal support, geopolitical tensions, and slow productivity growth, pose risks to the overall global economic outlook.

Performance of Advanced Economies During CY 2023 The USA, EA and EU

Advanced economies are expected to meet their inflation targets sooner than emerging market and developing economies. While overall inflation is predicted to gradually decrease, several structural challenges remain. These include inadequate infrastructure, limited access to quality education and healthcare, and insufficient investment in technological innovation, which impact the movement of capital and labour and slow progress toward higher living standards, especially in middle- and lower-income countries. In 2024, advanced economies are projected to grow by 1.7%, with a slight increase to 1.8% in CY 2025, compared to 1.6% growth in CY 2023.

Performance of Emerging Markets and Developing Economies During CY 2023 Emerging economies

Emerging markets and developing economies are expected to grow by 4.2% in both CY 2024 and CY 2025, slightly down from 4.3% growth in CY 2023. The global economic outlook is anticipated to remain stable, but there are concerns about potential increases in input costs due to geopolitical tensions, slowing inflation rates in major economies, and high government debt. The global economy aims to navigate these uncertainties and achieve sustained growth and prosperity for all

by addressing these challenges through strategic and collaborative measures.

Indian Economy

In FY 2023-24, the Indian economy has gained significant momentum, driven by positive macroeconomic indicators, improved labour market conditions, heightened urban demand, and increased government focus on capital expenditure. The National Statistics Organisation (NSO) in India has projected a robust growth of 7.6% for the Indian economy in FY 2023-24, exceeding the 7.0% growth witnessed in the previous FY 2022-23. Moreover, the Interim Budget for FY 2024-25 announced by the government indicates a move towards a self-reliant India, diminishing dependence on imports and fostering growth in domestic industries. By maintaining the status quo on both direct and indirect taxes, it ensures stability and simplicity for consumers.

According to the Short-Term Energy Outlook (STEO) April 2024 report, crude oil prices are expected to decline, reaching around US$ 90 per barrel for the rest of CY 2024 and averaging US$ 85 per barrel in CY 2025 as global oil production increases. This, along with the declining palm oil prices projected to moderate in CY 2023, will likely impact the Indian economy favourably.

Performance of the Indian Economy During FY 2023-24

Indias economy has shown strong growth, driven by robust domestic demand and expansion across multiple sectors. Gross Value Addition (GVA) growth is expected to reach 6.9% in FY 2023-24, up from 6.7% in FY 2022-23, due to improvements across various sectors. Significant contributors to GDP growth in FY24 include

the construction sector, with a growth rate of 10.7%, and the manufacturing sector, projected to grow by 8.5% after a 2.2% contraction the previous year. The agriculture sector is estimated to have grown by 0.7% in FY 2023-24, down from 4.7% in FY 2022-23, due to a challenging Kharifharvest and a slow start to the Rabi sowing season. The services sector is expected to expand by 7.5% in FY 2023-24, compared to 9.4% in FY 2022-23.

Rising Rural Focus

The Interim Budget for FY 2024-25 has unveiled positive impacts from different government schemes. As of February 1, 2024, the Pradhan Mantri Kisan Sampada Yojana has benefited 38 Lakh farmers, creating employment for 10 Lakh individuals. Additionally, the Pradhan Mantri Formalisation of Micro Food Processing Enterprises Yojana has supported 2.4 Lakh Self-Help Groups (SHGs) and 60,000 individuals through credit linkages. The governments goal of providing three crore houses under PM Awas Yojana (Grameen) is expected to be achieved soon, with plans for an additional two crore houses in the next five years. In FY 2023-24, robust consumption and investment propelled the economic growth rate. Urban consumption played a pivotal role in driving the countrys economic growth, while there has also been a strong focus on rural to kickstart growth. The rural consumption has potential to increase with rise in actual rural wages, coupled with a decrease in inflation. Additionally, increased kharif production and a higher Minimum Support Price (MSP) have further boosted rural income, reinforcing the trend in rural consumption.

Steps Taken by the Government to Support Economic Growth

RBIs Monetary Policy

The MPC of the RBI has maintained the policy repo rate at 6.5% throughout FY 2023-24 and continued its withdrawal of accommodation stance. The RBI reiterated its commitment to maintaining headline inflation at 4%. The RBI has estimated an inflation rate of 5.4% for FY 2023-24.

Smooth Access to Credit

Easy access to credit has been facilitated through various policies instituted by the Indian government, including initiatives to simplify loan application procedures, promote digital lending platforms, and create a conducive environment for financial institutions to extend credit. These measures align with the governments broader agenda of fostering financial inclusion, empowering diverse sectors, and driving economic growth through accessible and affordable credit avenues. The Pradhan Mantri Jan Dhan Yojana (PMJDY) stands as a key financial inclusion initiative in India, designed to achieve widespread banking access, enhance financial literacy, and empower the previously unbanked. As of May 15, 2024, a total of 52.25 Crore PMJDY accounts have been opened, accumulating a combined deposit balance of 2,29,799 Crore.

Strong Infra-Capex Growth

The increased government capital expenditure would stimulate economic growth, leading to higher consumer spending and improved infrastructure across the country. This, in turn, would positively influence the economy by boosting demand, enhancing supply chains, and expanding market opportunities. In FY 2024-25, the governments capital expenditure spending is projected to rise to 11.1 Lakh Crore as compared to the 10 Lakh Crore announced for FY 2023-24.

Robust Digital Drive

In India, the adoption of technology-driven solutions has notably improved e-commerce growth. The growth across various e-commerce platforms is achieved through the implementation of innovative digital payment methods, such as the unified payments interface (UPI). The digital payment transaction volume has witnessed substantial expansion, escalating from 2,071 Crore in FY 2017-18 to 13,462 Crore in FY 2022-23, reflecting a robust Compound Annual Growth Rate (CAGR) of 45%. As of December 11, 2023, digital payment transactions have already surpassed 11,660 Crore for FY 2023-24, emphasising the ongoing momentum in the adoption of digital payments. The surge in digital transactions has established an environment that enables various businesses to engage in cross-selling products and attract new clients.

OUTLOOK

While the global economic recovery exhibits variations and uncertainties, the Indian economy stands resilient and robust. Recent reforms, coupled with the economys strength and resilience, establish a sturdy groundwork for sustained long-term growth. According to the RBI, Indian GDP is expected to grow by 7% in FY 2024-25. The ongoing decrease in Indias fiscal deficit, supported by

robust tax collections, is reinforcing the foundations of the governments financial position. Key high-frequency indicators, such as automobile sales and Goods and Services Tax (GST) revenues, consistently demonstrate significant progress, fostering an optimistic outlook for the overall economy.

Challenges Ahead

Indias growth has been connected to both domestic factors and global changes. As the world moves away from hyper-globalisation, theres a growing trend of strengthening alliances and shifting operations within the country. This is reshaping the global trade scenario. The Indian economy is susceptible to global economic trends, and uncertainties in the global market can affect trade, investment, and overall economic stability. However, the Indian economy has demonstrated strength and resilience in the face of previous global trade challenges, positioning itself to continue being the fastest-growing economy in the future. The challenge of balancing energy security and economic growth in the transition to cleaner energy sources necessitates strategic decision-making across various dimensions like geopolitical, technological, fiscal, economic, and social.

The emergence of Artificial Intelligence (AI) poses a global challenge, especially regarding employment in the services sector, with an IMF paper underscoring that 40% of global employment is vulnerable to AIs impact. Developing economies, including India, are encouraged to make strategic investments in infrastructure and foster a digitally skilled workforce to harness AIs potential.

INDUSTRY OVERVIEW

The FMCG industry stands as a pivotal contributor to the Indian economy. The growth of the FMCG sector can be attributed to various factors, including rising

income levels, evolving lifestyles, heightened awareness, and improved accessibility. Additionally, the inclination towards sustainable products is shaping consumer preferences. The Indian FMCG market continued to show resilience and has been expected to witness growth rate of 4.5% to 6.5% in FY 2023-24, according to Nielsen report. The FMCG industry has experienced a 6% increase in value, driven by a 6.4% rise in volume during 4Q CY 2023.

In 2023, the narrowing of consumption gaps between urban and rural markets was observed for the first time. During 4Q CY 2023, the urban market saw a volume growth of 6.8%, while the rural markets experienced a growth of 5.8% in the same period. This trend was particularly notable in the north and west regions of the country. The favourable interim Union Budget 202425, which supported several economic boosters for the rural sector, positively impacted companies with a rural strategy. Although experiencing a decline compared to the previous quarter, the rural recovery story progressed steadily throughout the year. In 4Q CY 2023, there was a noticeable increase in consumption, mainly fuelled by habit-forming categories such as food and essential home products. Despite seeing little to no price growth or even a decrease, these categories remained robust, demonstrating resilience and ongoing demand.

In the retail sector, Modern Trade (MT) continued its robust growth, maintaining a high double-digit increase of 16.8%, which reflected its resilience and steady demand. Meanwhile, Traditional Trade (TT) faced a downturn, with consumption dropping to 5.3% in 4Q CY 2023 from 7.5% in the preceding quarter. Despite these challenges, the upward trajectory of Modern Trade offered a promising outlook for the overall market landscape.

Volume growth across urban and rural markets, as well as within Modern Trade and Traditional Trade, observed during the fourth quarter of CY 2023.

Within the FMCG industry, the non-food categories surpassed the food categories in consumption growth, reflecting an increase of 8.7%. The food category experienced a growth of 3.8%, indicating a slowdown compared to the previous quarter. However, the habit- forming categories within the food sector demonstrated resilience, thriving despite flat to negative price growth, which suggests sustained demand. On the other

hand, the non-food sector experienced a significant resurgence, with volume growth reaching 9.6% in 4Q CY 2023 compared to the previous year. Rural areas were pivotal contributors to this growth, with a growth rate of 9.8% in 4Q CY 2023. Home Care and Personal Care categories in rural areas had particularly driven the growth of non-food consumption.

KEY TRENDS IN THE INDIAN FMCG INDUSTRY

The digital space, e-commerce, and green initiatives are reshaping the FMCG industry, along with trends like direct-to-consumer channels, analytics integration, and strategic investments. The FMCG sector is poised for substantial growth, emphasising adaptability, innovation, and understanding of consumer trends in the evolving Indian market.

Growing Adoption of Technology: FMCG companies are leveraging big data to innovate and gain a competitive edge. Analysing consumer data from online shopping enables brands to build stronger relationships, understand customer preferences, and personalise experiences. The integration of big data solutions and analytics in the FMCG sector optimises communication strategies, fostering enhanced engagement in the dynamic industry landscape.

The household and personal care segments have propelled Indias FMCG industry as a significant force driving economic growth. Over the past few years, this sector is experiencing transformative shifts influenced by changing consumer behaviours, technological advancements, and global trends.

Increasing Marketing Activities through Social Media Influencers

In the FMCG industry, influencer marketing is a powerful trend driven by the widespread influence of social media. Brands are increasingly collaborating with trusted influencers to promote products, spanning beauty, skincare, food, and lifestyle. Influencers connect with large audiences, effectively conveying the benefits of FMCG items. Their authentic content builds trust and relatability, meeting the consumer demand for personalised connections with brands. This trend highlights the industrys acknowledgement of social media influencers as crucial players in shaping the contemporary consumer landscape.

Shift towards Economic Packaging: Advertising emerges as a crucial determinant in the reach of a product or brand, directly influencing consumer spending. Rising inflation has led to tangible shifts in consumer purchasing behaviour, prompting FMCG companies to adjust product prices due to increased raw material costs. This adjustment is not limited to retail prices but also includes "grammage reduction", particularly targeting low-unit price items.

Consumers, affected by price inflation, are adjusting to reduced spending by opting for smaller food and beverage packs without compromising quality. In CY 2024, success for brands involves prioritising

packaging innovations and delivering personalised promotions to align with the changing preferences of cost-conscious consumers. These consumers are also adopting resourceful strategies to minimise product wastage.

Surging Rural Penetration

Although the urban sector remains a substantial contributor to the FMCG market, the past decade has witnessed notable growth in semi-urban and rural sectors. Enhanced penetration, upgraded infrastructure, and targeted marketing efforts have driven this expansion. Going forward, FMCG companies are anticipated to amplify their efforts to comprehend and address the distinctive needs of consumers in these growing markets.

Rising E-commerce Growth

The digital transformation is significantly impacting the FMCG sector, with e-commerce playing a crucial role in reshaping consumer experiences. In 2024, there is a notable surge in online sales driven by the convenience and accessibility provided by digital platforms. The FMCG industry heavily relies on insights, consumer behaviour, preferences, and market trends. Digitalisation has facilitated retailers in securely placing orders, checking order fulfilment status, and integrating suppliers, inventory, and distributors into a unified ecosystem. FMCG companies are utilising technology not just for sales but also for data analytics, supply chain management, and personalised marketing strategies. The integration of artificial intelligence and machine learning is playing a key role in enhancing efficiency and optimising decision-making processes.

The FMCG industry in India is poised for a dynamic and promising future characterised by sustainability, digital transformation, and inclusive growth. As consumer preferences evolve, FMCG companies need to stay adaptable, adjusting their strategies to meet the demands of a constantly changing market.

OUTLOOK

Looking ahead, the FMCG industry expects to see growth driven by higher sales volumes in FY 2024-25. This growth will be supported by increased consumer spending, owing to the factors such as stable prices, predictions of good monsoon rains, and optimistic forecasts for crop yields. Notably, rural areas are showing more positive attitudes towards spending, with people there increasingly buying premium packaged goods. This trend is fuelled by improved household incomes and better support prices for crops. The non-food items are seeing stronger demand compared to food items across the FMCG sector. The recent adjustments

in pricing and product offerings are expected to help FMCG firms increase their revenues significantly over the next couple of fiscal years. The positive outlook is further boosted by optimistic monsoon forecasts, which are expected to keep rural sentiment high and drive even more sales growth for FMCG products.

COMPANY OVERVIEW

Jyothy Labs Limited (hereafter referred to as Jyothy Labs or Your Company), has undergone a substantial transformation from a promoter-driven, south-centric, single-product entity to a professionally managed, and multi-product Company operating nationwide. Your Company was founded in 1983 in Thrissur, Kerala by Mr. M. P. Ramachandran, with a single brand, Uj a l a and has since evolved into a multi-brand, BSE Limited (Bombay Stock Exchange), and National Stock Exchange of India Limited - listed Company.

Jyothy Labs holds a significant presence in the Home Care and Personal Care segments, contributing to an impressive 50% share in the Indian FMCG industry. Your Company maintains a strong national presence and operates 23 state-of-the-art plants. Jyothy Labs specialises in the manufacturing of a diverse range of products including fabric care, household insecticides, personal care, and dishwashing items, catering to the needs of consumers seeking cleaning and hygiene solutions.

Your Company takes pride in its portfolio of power brands, which include Ujala, Maxo, Exo, Henko, Pril, and Margo. These brands are highly esteemed and firmly established within their respective categories. Over the years, our Company has introduced numerous innovative products with unique ingredients and features that significantly enhance consumer satisfaction. Notably, our flagship brand Ujala Supreme has maintained a dominant position in the fabric whitener category since its inception, commanding an impressive 84% market share. Exo and Pril dishwashing products have secured the second position in the market by value, while Maxo mosquito repellent coils have achieved the second position by volume in FY 2023-24.

With a robust presence in India, your Companys products are widely accessible through an extensive network of retail outlets and supermarkets. Jyothy Labs has successfully established a presence across various channels, including traditional stores, canteen stores, department stores, modern trade, and e-commerce, making its products available across India. Your Company continues to prioritize research and development to meet evolving consumer needs. Additionally, strategic celebrity endorsements contribute to quick recognition and awareness. Furthermore, your Company maintains a robust digital presence by offering products online through various e-commerce platforms.

Jyothy Labs aspires to be a brand that is accessible, affordable, and renowned for its exceptional quality. To fulfil this vision, your Company emphasises maintaining strong product quality, offering competitive pricing, and improving distribution through network expansion and deploying advanced technolgies.

KEY STRENGTHS AND STRATEGIES

• Strengthening Brand Equity

Your Company is committed to enhancing its presence in the fabric care sector, with a particular emphasis on the main wash segment and exploring new geographic markets for post-wash products. Concurrently, your Company aims to achieve significant growth across diverse product categories, striving for broader market penetration and enhanced consumer engagement. Central to this strategy is reinforcing brand loyalty and equity to solidify its position as consumers preferred choice and ultimately capture a larger market share.

Your Company makes substantial investments in diverse advertising and promotional initiatives, encompassing television and over-the-top (OTT) platforms, digital campaigns, and in-store brand activations. Moreover, it has engaged nine celebrities for brand endorsements. Recognizing the growing importance of social media, your Company conducts numerous engagements and promotional activities on these platforms. Additionally, out- of-home (OOH) campaigns across all product categories in key markets enhance brand visibility and communication. Throughout FY 2023-24, your Company executed various activities aimed at building and promoting its brands.

o Ujala Supreme: Sustained ATL (Above the line) campaign featuring superstar Taapsee Pannu in key markets, with targeted consumer activations in School and Society activations creating engagement. The market share for Ujala Supreme reached 84% in CY 2023.

o Ujala Detergent Powder: ATL campaign

featuring superstar Manju Warrier was conducted across critical markets, complemented by on-ground activations and a strong emphasis on digital media. In FY 2023-24, Ujala Detergent achieved a market share of 22.9% in Kerala.

o Ujala Crisp & Shine: Consistent ATL

presence, strategic consumer activations for product trials, and sustained emphasis on digital media for product awareness.

o Henko Matic Liquid Detergent: Enhanced TV campaign, widespread OOH displays, retail activations, and digital strategy with Key Opinion Leaders to foster brand affinity and promote product trials.

o Mr. White & Morelight Detergent Powder:

Distribution efforts focus on increasing brand penetration and strategically expanding into rural areas for greater visibility and accessibility.

o Margo Soap: Achieved robust double-

digit growth through strategic investments in above-the-line (ATL), social media, and below-the-line (BTL) activities, promoting its positioning as "Ek Achhi Aadat". The brand also concentrated on influencer marketing to target younger audiences.

o Exo Dishwash Bar: Implemented strategic initiatives with relevant consumer packs, leveraging the brands equity, and conducted an out-of-home (OOH) campaign and engaging activations to enhance visibility. The emphasis on Lower-Unit Packs (LUPs) continued, with the 10 pack contributing to a 13.7% value market share in FY 2023-24.

o Pril Dishwash Liquid: Executed focussed initiatives to drive growth in Open Format Outlets (OFO), achieving a 13.7% value market share in FY 2023-24, with strong growth in e-commerce channels.

o Maxo Mosquito Repellent: Launched a new multimedia campaign featuring Kareena Kapoor, highlighting the automatic feature to increase product awareness. In FY 2023-24, Maxo Coil market share was 23.8%, while the liquid vaporiser segment accounted for 8.3% of the market share.

For further details on segment/product wise kindly refer to page 03.

• Expanding Distribution Network

Our distribution network has seen substantial development, with products available in over 2.8 million retail outlets through a network of 9,900+ channel partners. In FY 2023-24, your Company reached 1.2 million Retail outlets directly. This strategic expansion aids us in navigating the challenges of a slowing consumption environment by strategically focussing on sales in new geographies, intensifying BTL activities, and tailoring the product portfolio to the specific

needs of each market. Your Companys distribution efficiency has seen remarkable growth, measured by the number of SKUs (Stock Keeping Units) sold per retail outlet and productive calls.

The robust distribution reach and infrastructure of Jyothy Labs has facilitated the acquisition of significant market share for its products across the country. Meticulously planned sales and distribution form a pivotal part of your Companys strategy to enhance its market share. This involves entering new markets, increasing brand awareness, and implementing product innovation initiatives, supported by an extended distribution network.

During FY 2023-24, as part of its strategy to expand its rural reach and expedite its distribution, your Company has adopted the van and moped sales model, which carries smaller unit packs that are more popular in these regions. Your Companys rural distribution has been digitised through Mobile DMS and facilitated by SFA (Sales Force Automation). The robust distribution reach and infrastructure of your Company enabled it to acquire market share by filling the vacuum caused by pandemic-related disruptions. Your Company has made significant investments in advertising and promotion activities, including television, digital campaigns, and in-store brand activation during FY 2023-24.

• Extensive In-house Research and Development (R&D) facilities

Jyothy Labs derives a competitive advantage in the market from the fundamental strength of its research and development efforts. With three

state-of-the-art R&D facilities, your Companys expert team consistently works on developing new products aligned with evolving trends, enhancing production processes, and refining the formulations of existing products. In recent years, there has been a heightened focus on developing sustainable products made with eco-friendly ingredients.

• Innovating New Products and Variants

Recent product developments by Jyothy Labs have received significant support, as evidenced by the success of its liquid detergents under the Henko and Ujala brands, and the introduction of new Margo variants. These strategic initiatives, along with our consumer-focussed approach, are aimed at strengthening our market position. Moving forward, your Company is focused on achieving volume-driven growth and expanding business operations through continued efforts in these key areas.

• Adapting Sustainable Solutions

A key focus area of your Company has been sustainable packaging, where your Company is taking steps to transition towards a circular economy. Prioritising the reduction of its carbon footprint, your Company maintains a 45-acre green belt and has invested in energy- efficient solutions, including renewable energy projects. With a commitment to achieving net- zero emissions, your Company is actively exploring relevant opportunities.

Jyothy Labs has proactively undertaken measures to ensure the environmental sustainability of its operations, recognising the increasing global significance of sustainability. This includes efforts such as adapting environmentally friendly alternatives. Furthermore, ongoing research and development efforts are directed towards creating organic and natural products while expanding the utilisation of sustainable raw materials.

Jyothy Labs continues to prioritise volume-driven growth to achieve greater scale in its business operations, with a significant focus on recovering rural demand to sustain expansion across product categories. The Companys investment efforts are dedicated to strategic brand development, enhancing direct distribution channels, and increasing manufacturing capacity.

FINANCIAL PERFORMANCE

Accounting Policy

The financial statements of your Company have been meticulously prepared in compliance with the Indian Accounting Standards (Ind AS) as notified under the Companies (Indian Accounting Standards) Rules, 2015, with subsequent amendments. These statements adhere to a historical cost basis, except for specific financial assets, which have been assessed at fair value. The Management Discussion and Analysis predominantly focusses on the consolidated accounts of your Company when delving into the discussion of financial performance.

Review of FY 2023-24 (Consolidated financi?is)

Particulars	FY 2023-24	FY 2022-23
Revenue from Operations	2,756.9	2,486.0
Cost of Goods Sold (COGS)	1,403.8	1,434.9
Gross Margin	1,353.1	1,051.1
Employee Cost	300.5	264.4
Advertisement and Sales Promotions	228.2	174.3
Other expenditure	344.6	296.5
Operating EBITDA	479.8	315.9
Depreciation	50.0	50.1
Finance Cost	4.7	13.1
PBT before exceptional items	478.8	292.2
PAT	369.3	239.7
Share Capital	36.7	36.7
Cash and Bank Balance including Investments	618.0	283.5

Details of Key Consolidated Financial Ratios that registered more than 25% change during FY 2023-24

Ratios	FY 2023-24	FY 2022-23	YoY Change	Reason
The Net working capital Turnover Ratio	4.19	6.74	-38%	Decrease due to increase in cash and bank balance and mutual fund investment.
Operating EBITDA (%)	17.4%	12.7%	37%	Operating EBITDA has improved due to better margin on higher sales achieved during the year and lower raw material prices.
Net Profit Ratio (%)	13.4%	9.64%	39%	Net profit ratio has improved due to better margin on higher sales achieved during the year and lower raw material prices.
Return on Equity (%)	21.97%	16.02%	37%	The Return on Equity has improved due to better margin on higher sales achieved during the year and lower raw material prices.

Revenue from Operations

Net Revenue from operations grew by 10.9% to 2,756.9 Crore.

Cost of Goods Sold (COGS)

The Cost of Goods Sold of your Company decreased by 2.2% to 1,403.8 Crore due to reduction in raw and packing material prices.

Employee Cost

Employee costs grew by 13.7% to 300.5 Crore.

Advertisement and Promotion Cost

Advertisement and promotion costs increased by 30.9% to 228.2 Crore. As a percentage of net sales, advertisement and promotion stood at 8.3% during the year.

Other Expenses

Other expenses increased by 16.2% to 344.6 Crore during the reporting period from 296.5 Crore in FY 2022-23.

Depreciation

During the reporting period, depreciation decreased by 0.3% to 50.0 Crore from 50.1 Crore in FY 2022-23.

Finance Cost

During the reporting period, finance costs decreased by 63.9% to 4.7 Crore from 13.1 Crore in FY 2022-23 due to repayment of loan.

Margins

Operating E BIT DA at 17.4% (? 479.8 Crore) during FY 2023-24 as compared to 12.7% (? 315.9 Crore), increased by 51.9% over FY 2022-23. PBT before exceptional items at 478.8 Crore during FY 2023-24 as against 292.2 Crore, increased by 63.9% over FY 2022-23, PAT at 369.3 Crore as against 239.7 Crore, increased by 54% over FY 2022-23.

Share Capital

The paid-up share capital stood at 36.7 Crore as on March 31, 2024.

Net Worth

The net worth of the Company stood at 1,808.3 Crore as on March 31, 2024, from 1,549.0 Crore as on March 31, 2023. Return on Equity (excluding Goodwill) was 36.1% in FY 2023-24.

Net Block

Net Block for the Company stood at 1,125.26 Crore as on March 31, 2024, as against 1,116.34 Crore as on March 31, 2023.

Net Operating Working Capital

Net Operating Working Capital for the Company stood at 40.6 Crore as on March 31, 2024, as against 85.4 Crore as on March 31, 2023. This translates to 5 days of working capital as against 13 days in FY 2022-23. The Current Ratio stood at 2.37 on March 31, 2024, as against 1.91 as on March 31, 2023.

Inventory

Inventory of the Company stood at 283.5 Crore as on March 31, 2024, compared to 301.9 Crore as on March 31, 2023. Inventory Turnover for the Company stood at 76 days as of March 31, 2024.

Trade Receivables

Trade Receivables for the Company stood at 201.4 Crore as on March 31, 2024. Debtor turnover stood at 27 days as of March 31, 2024, as against 20 days as of March 31, 2023.

Cash and Bank Balances including investments

Cash and bank balances for the Company stood at 618.0 Crore as on March 31, 2024.

Provisions

Provisions for the Company stood at 108.6 Crore as on March 31, 2024, against 92.7 Crore as on March 31, 2023.

Other Liabilities

Other Liabilities for the Company stood at 120.8 Crore as on March 31, 2024, against 122.9 Crore as on March 31, 2023.

Shareholder Value: Dividend

In an endeavour to maximise the returns to its shareholders, the Board of Directors has recommended a dividend of 3.5 per equity share (350% dividend ratio) of 1/- per share for FY 2023-24.

SEGMENT-WISE PERFORMANCE

Fabric Care

The Fabric Care segment experienced a growth of 12.6% in FY 2023-24. The segment contributed to 43% of the total revenue in FY 2023-24 as compared to 42% recorded in FY 2022-23. This indicated a strong performance and a significant share in the Companys overall portfolio.

Dishwashing

Dishwashing products saw a growth of 8.3% in FY 2023-24. The segment contributed of 34% to the total revenue in FY 2023-24, as compared to 35% registered in FY 2022-23.

Household Insecticides

The Household Insecticides segment showed moderate growth of 0.3% in FY 2023-24. The segment contributed of 8% to the total revenue in FY 2023-24 as compared to 9% in FY 2022-23.

Personal Care

The Personal Care segment achieved robust growth of 21.1% in FY 2023-24, with its contribution to total revenue increasing to 11% in FY 2023-24 as compared to 10% revenue contribution in FY 2022-23. This growth reflected successful market strategies and consumer acceptance of the products.

Others

The Other Products category had a growth of 12.1% in FY 2023-24. The specific revenue share percentage for FY 2023-24 stood at 4%.

HUMAN RESOURCES

Jyothy Labs has made significant strides in enhancing employee engagement and enhancing a supportive work environment. Monthly sessions and the SAMWAD initiative have been introduced to improve communication and synergy among employees. Your Company had also initiated campus connect programmes to recruit fresh graduates.

The HR team is also focussing on increasing the recruitment of female employees in sales. Your Company has made strong efforts to maintain a balanced gender ratio across functions which are complemented by robust anti-sexual harassment policies and flexibility for women returning from maternity breaks. These initiatives underline Jyothy Labs dedication to creating an inclusive and supportive workplace. Jyothy Labs prioritises employee well-being through comprehensive benefits. Regular health check-up camps are organised by your Company, with plans to enhance these services in future. Your Company provides medical insurance and voluntary cover for parents with flexible benefits. Employees can make changes to the plan basis his/her life, also allows employees to increase the sum assured. Well-being sessions and medical camps are also being conducted, and employee engagement initiatives like Play Sports are organised to promote a healthy and active lifestyle.

Your Company has embraced digital transformation to streamline HR processes. E-recruitment processes, E-onboarding processes and SAP Success Factors has been rolled out for employees. Additionally, HR analytics and platforms for expense and travel management have been introduced by your Company to enhance operational efficiency and improve the overall employee experience.

Jyothy Labs is committed to fair treatment and merit-based evaluations. The appraisal cycle remains consistent, with a transparent review mechanism based on KPI parameters set by function heads. This approach ensures that promotions and rewards are based on performance and contribution, promoting a culture of excellence. Your Company places importance on employee tenure, acknowledging the loyalty and valuable contributions of its long-standing staff members. A significant percentage of employees have been with your Company for more than 5, 10, or 15 years, reflecting Jyothy Labs supportive and positive work environment. The Total employees (Permanent and Non Permanent) were 8,132 in FY 2023-24.

INFORMATION TECHNOLOGY (IT)

Jyothy Labs has been leveraging IT solutions to streamline processes, optimise resource utilisation, and implement cutting-edge technologies that contribute to its overall agility and effectiveness in the market. Your Company has not only been focussing on IT initiatives for human resources but also investing significantly in modern technologies to automate various processes. Your Companys focus has been on Sales Force Automation, particularly in managing orders, where it has put in substantial efforts to make things more streamlined and efficient.

In FY 2023-24, Jyothy Labs has put into action the following important initiatives. The IT team at Jyothy Labs has significantly enhanced your Companys technological infrastructure by improving security and cloud capabilities, adapting hyperconverged infrastructure, and consolidating servers to save energy and space. Your Company has implemented Zscaler for secure remote access, supporting a secure work-from-home environment. The other key initiatives included rolling

out a distributor management platform with handheld terminal functionality for the sales force, conducting quarterly campaigns for products, and adopting Sales Force Automation (SFA) to streamline operations. The Continuous Replenishment System (CRS) has been introduced for efficient multi-SKU (Stock Keeping Units) billing and inventory management, along with the Logiconnect platform to optimise transport management. The J-Fleet platform was introduced to manage vehicle logistics, tracking fuel consumption, distances covered and trips completed. In addition, an internally developed expenses management platforms helped to streamline employee expenses management process, also bringing down the turnaround time of expenses reimbursements from 30+ days to 6 days. SAP Concur was introduced for automated invoice processing to improve financial operations and efficiency, this is alongside many other internal platforms for managing brand campaign activations and facilitating direct consumer engagement.

RISK AND MITIGATION

Your Company has been implementing effective measures for identifying, preventing, and mitigating

business risks. Proactive and responsive risk mitigation is considered a fundamental aspect of your Companys corporate governance principles.

The Company ensures that its risk mitigation strategy is in alignment with its core values and comprehensive business objectives. Your Companys decision-making processes give equal priority to ensuring business continuity and safeguarding the well- being of employees.

A strong system for analysing and managing risks is in place, involving constant and thorough monitoring of internal and external factors that affect your Companys operations. The Board has taken a leading role in designing this risk mitigation framework, overseeing its implementation, and consistently revising it as and when needed. The senior leadership holds the responsibility for its execution, and regular meetings of the Risk Management Committee are convened to review the framework.

For opportunities, you can refer to page no. 98 forming part of the annual report.

Type	Mitigation Strategy
MACRO-ECONOMIC RISK
The uncertain global economic environment, influenced by unfavourable external or internal factors, poses potential impacts on your Companys business operations.	To address this challenge, your Company proactively monitors the external environment for signs of adverse changes that could affect business operations. It includes diversifying the product portfolio and implementing targeted sales strategies in key markets. Product diversification supports overall profitability by fostering growth in various categories and offsetting potential risk impacts on individual categories.
	In FY 2023-24, your Company has adopted technology to advance digital transformation within the organisation, optimising the value chain and improving efficiency. This initiative also contributed to an enhanced retail penetration, aligning with the goal of increased efficiency.
STATUTORY RISK
Non-compliance with government regulations can lead to detrimental effects on a business reputation, along with substantial fines and penalties.	Jyothy Labs has established a proven and well-structured system to meet all compliance requirements promptly, preventing fines and penalties. We ensure compliance with national and local statutory rules imposed by the government, monitoring it through a centralised compliance tool that proactively addresses any exceptions or non-compliance.
INPUT PRICE RISK
Input price risk is the uncertainty and potential impact on profitability arising from fluctuations in the prices of raw materials or inputs used in a business production processes.	To mitigate input price risk, your Company has been actively monitoring market trends to make informed procurement decisions. Additionally, the combination of strong supplier relationships and a focus on volume growth works as a proactive approach to mitigate input price risks by providing stability, negotiating power, and taking advantage of economies of scale.
SUPPLY CHAIN RISK
Disruptions in global or local supply chains may directly impact a Companys ability to produce and market products, affecting revenue generation for your Company.	We manage this risk by maintaining a robust network of channel partners for continuous raw material supply and product distribution. Your Company conducts thorough internal research on materials management to develop substitutes for basic materials, addressing potential supply chain issues. Over the past few years, organisation-wide digital transformation has yielded significant cost savings.
COMPETITION RISK
Intense competition in the FMCG market can impact your Companys margins and profitability.	We counter peer risk by investing significantly in research and development, focussing on innovative solutions, new products, brand development, and marketing. These efforts enhance your Companys customer value proposition and foster customer loyalty, contributing to its sustainability in the market. The focus of your Companys endeavours is to facilitate its growth in comparison to both emerging and well-established competitors in the industry.
ATTRITION RISK
The absence of qualified employees and high attrition can impact your Companys operational efficiency.	We prioritise the employees career growth, health, and safety, implementing ongoing training, upskilling, and enhancing a better work environment. Your Companys inclusive human resource policies aim to promote diversity, equity, and inclusion, with nearly 29% at Jyothy Labs manufacturing facilities being female employees. We motivate employees through various facilities and benefits and have taken measures to ensure their safety by adhering to protocols, supporting victims, and facilitating hybrid work. Your Companys human resource initiatives have been immensely effective in retaining employees, thereby reducing attrition risk to a considerable level.

INTERNAL CONTROLS

Jyothy Labs has implemented a comprehensive interna! control mechanism, including policies and procedures designed to ensure the orderly and efficient conduct of its business operations. These measures included strict adherence to your Companys policies, safeguarding of assets, prevention and detection of fraud and errors, and ensuring the accuracy and completeness of accounting records. Your Company maintains robust internal financial control systems tailored to its size and industry, promoting integrity, ethics, and management efficiency. The Board of Directors oversees the effectiveness and application of these systems, conducting periodic assessments of their adequacy. Regular evaluations are conducted to monitor governance processes and ensure compliance with regulatory requirements.

CAUTIONARY STATEMENT

This report contains statements that may be forward- looking including, but without limitation, statements

relating to the implementation of strategic initiatives and other statements relating to Companys future business developments and economic performance. While these forward-looking statements indicate our assessment and future expectations concerning the development of our business, several risks, uncertainties, and other unknown factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to, general market, macroeconomic, governmental, and regulatory trends, movements in currency exchange and interest rates, competitive pressures, technological developments, changes in the financial conditions of third parties dealing with your Company, legislative developments and other key factors that could affect our business and financial performance. The Company undertakes no obligation to publicly revise any forward-looking statements to reflect future/likely events or circumstances.