Expect 35% topline growth in H2: Jyothy Labs

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Expect 35% topline growth in H2: Jyothy Labs

In an interview with CNBC-TV18, Ulhas Kamath, Deputy MD of Jyothy Laboratories, spoke about the latest happneings in the company and his outlook for the sector.

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Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » ALSO READ See latest News about Jyothy Laboratories See previous management interviews See what other Experts & Brokerages are saying about Jyothy Laboratories Nifty BSE | NSE 29/05/12 Are Mutual Funds betting on Nifty?

In an interview with CNBC-TV18, Ulhas Kamath, Deputy Managing Director of Jyothy Laboratories , spoke about the latest happneings in the company and his outlook for the sector.

Here is a verbatim transcript.

Q: It was a fairly strong second quarter performance in terms of sales-about 15% rise -and profit as well-about tripling from Rs 5 crore year ago to Rs 14 crore. What kind of a run rate can we expect for the second half and indeed for FY11? Can you really maintain this pace of growth?

A: For the second half, I think we will be able to maintain about 35% topline growth and maybe 30-35% in the botomline growth. In the last quarter, if you see the 177% up in the profitability, is mainly because during the same time last year the raw materials prices were at the peak, especially crude prices. That is the advantage what we have got in the current year where most of the raw material prices have settled down. Going forward, we are comfortable with 35% topline growth and equal percentage in the bottomline growth in the year 2010.

Q: So that would translate into sales of over Rs 550 crore and an earning per share (EPS) of over Rs 10 for full year?

A: We are planning Rs 650 crore in the topline because so far the topline growth has been around 50%. Going forward even if I take about 35%, it should be in the range Rs 675-700 crore.

Q: What about margin picture?

A: The earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin has improved by 5%, last time we were about 10% now it is about 15.5%. That is very healthy trend. Again, it is mainly because of the cost of the raw materials is setting down of 2007-2008 levels and we are comfortable with this. Now we are working on EBITDA margin of 15.5%. It is line with our expectation.

Q: You were saying something about EPS. What will you do, this is would you do Rs 10?

A: I think we should be doing around Rs 12 this year.

Q: Out of your sales how much come from the main brand Ujala and how much from others?

A: In the last couple of years, Maxo is been doing extremely well that is a house holding insecticide business which we are into whereas Ujala is growing very healthy at 10-12%. But Maxo, a mosquito repellent business, has grown around 35-40% in the last year. The entire sales, about 38% of the sales come from Ujala, about 36% come from Maxo and the balance from our dish-wash segment called Exo. So it is very well spread across all the segments in which we are present.

Q: How is your door-to-door laundry service doing?

A: We have just launched our high-tech laundry a couple of days back in Bangalore. We have been experimenting this for the last one year. We had acquired a local laundry at Bangalore and when we acquired it there were eight laundry units and we added 22 more and now we are 30 units as far as economy is concerned. But the one which we have launched a couple of days back in Bangalore is a real high-tech laundry, the first of its kind in India. It is real world class and we have invested Rs 35 crore in that project. We have opened already two premium stores called Fabric Spa. We have launched our door to door campaign from yesterday and we are very bullish on that because this is the first time that anybody is getting into the laundry business, which is so unorganized, at such a massive scale. We want to make it a very well organized business.

Q: You have couple of other expansion plans as well. So what can you say in terms of volume growth in FY11 and FY12?

A: In the current year our entire growth has come from volumes and there is no increase in maximum retail price (MRP) in any of our products. So we are seeing a real good volume growth of 35% in the year. In the FMCG business, in established business, 35% growth what we see is primarily because of our robust presence in the rural market.

The rural market is absolutely giving us complete positive trend and I continue to believe that in a couple of more years, you should be able to get good response in volumes from rural market for all our products. Whereas this laundry business is concerned, it is a service industry. Here it is in an initial phase and I will say that maybe a couple of years down the line when we are national then we will get lot of business.