Jyoti Resins and Adhesives Ltd Management Discussions

A. Macroeconomic and Industry Overview

The financial year 2024-25 was a landmark year for the Indian economy, fueled by a stable government and significant investments in infrastructure. This robust environment propelled the Indian adhesives and resins industry, which continues to show impressive growth. The market is projected to accelerate its expansion from a 6.8% CAGR (2019-2024) to a 7.1% CAGR through 2032, driven by a growing focus on home improvement and rising disposable incomes.

Our company has not just participated in this growth—it has led it. Over the last decade, we have achieved a staggering 38% revenue CAGR, a rate that far outpaces the industry average and solidifies our position as a formidable market leader.

This success is rooted in our strategic foresight. The industry is rapidly shifting toward sustainable, water-based solutions, driven by stricter environmental and safety regulations. Our flagship brand, EURO Adhesives, is a water-based Polyvinyl Acetate (PVA) wood adhesive. This positions our core product at the heart of the fastest-growing and most compliant segment of the market, proving that our strategy is both profitable and sustainable.

B. Company Overview and Competitive Strategy

Jyoti Resins and Adhesive Limited is a leading manufacturer of high-grade synthetic wood adhesives, proudly marketed under the brand EURO Adhesives . Our mission is clear: to become a national leader in the retail wood adhesives sector and the preferred brand for carpenters across India. This focused approach has allowed us to effectively compete against larger, more diversified players, making EURO Adhesives the second-largest selling wood adhesive brand in Indias retail segment.

A key pillar of our competitive advantage is our extensive and robust distribution network. Spanning 14 states with 64 branches and 60 distributors, this network reaches over 12,000 retailers and directly engages with more than 3.5 lakh carpenters. In FY 2023-24, we strategically expanded our presence by opening five new branches in key high-consumption markets, including New Delhi and Uttar Pradesh. This widespread network is not just a logistical asset—its a strategic moat that ensures ubiquity and direct access to our core customer base.

Weve cultivated a unique and powerful edge through our "carpenter reward model." This loyalty program transforms a transactional purchase into a relationship built on brand loyalty. By offering rewards for every purchase through a dedicated app, weve created a "sticky" customer base and cemented our relationship with the most critical stakeholders in our value chain.

C. Financial Performance (FY 2024-25)

Our financial performance for the year ended March 31, 2025, showcases our strong operational capabilities and strategic execution.

C.1. Revenue and Profitability

During FY 2024-25, we reported a robust standalone revenue of ?284.12 crore, up from ?257.3 crore in the previous year. This top-line growth was matched by an increase in net profit to ?73.88 crore, a testament to our operational efficiency and pricing power.

While our quarterly sales continued to rise to ?75.10 crore, a temporary margin compression was noted. This was a calculated trade-off as we deliberately invested in aggressive network expansion and brand-building initiatives to capture a greater market share and secure a more dominant position in the future. We are choosing to invest today to generate stronger, more sustainable returns tomorrow.

C.2. Balance Sheet and Capital Structure

Our financial resilience is a core strength. For the last two fiscal years, we have maintained a zero-debt status, providing a significant competitive advantage and shielding us from interest rate volatility. This allows us to fund our ambitious growth plans entirely through internal accruals.

Our reserves have shown phenomenal growth, climbing from ?0.34 crore in 2016 to a substantial ?217.26 crore by the end of FY 2024-25. This rapid accumulation of reserves, along with the tripling of our Equity Share Capital to ?12 crore in FY 2022-23, signals that our growth is internally funded, asset-light, and working capital efficient—the hallmarks of a well-managed business.

C. 3. Cash Flow

We have consistently generated positive cash flow from our operating activities, a clear validation of the quality of our earnings. The reinvestment of this cash back into the business, particularly to support higher sales volumes and a wider distribution network, demonstrates our ability to sustain growth without external financing. Our commitment to capital expenditure, reflected in our consistently negative cash flow from investing activities, is essential for our ongoing capacity expansion and operational enhancements.

D. Operational Review and Strategic Initiatives

Our strong financial performance is a direct result of proactive operational and strategic initiatives. Weve initiated a major project to increase our plant capacity by 50%, from 1,000 tonnes per month (TPM) to 1,500 TPM. This forward-looking investment is a clear signal of our confidence in future growth and our commitment to seizing market opportunities.

Our operational model is built on efficiency and cost control. We manage a lean operational structure with manpower costs at 15-16% of revenues and selling and distribution expenses at less than 12%. This discipline allows us to maintain superior profitability and reinvest a larger portion of our earnings back into the business, creating a powerful virtuous cycle of growth and self-sufficiency.

E. Outlook, Opportunities, Risks & Concerns

We are exceptionally optimistic about the future and are well-positioned to capitalize on significant opportunities. With a proven track record, we have set an ambitious target of a 30% revenue CAGR over the next 3-5 years. We are confident in our ability to maintain impressive return ratios (ROE and ROCE of 25-30%) while remaining debt-free.

Growth opportunities are vast, driven by macroeconomic tailwinds like increased government spending on infrastructure, a booming home improvement market, and rising consumer spending.

While we are mindful of potential risks like an economic slowdown or volatility in raw material prices, our zero-debt status provides a strong financial buffer. Our deep focus on a specific market segment and our powerful loyalty program serve as effective defenses against aggressive competition. Our operational efficiency and asset-light model are our core tools for navigating input cost volatility and ensuring sustained profitability.