See around 20-25% growth in Henkel's biz ahead: Jyothy Labs

4744 Investors following Jyothy Laboratories. Share this News with them.

0

Like this story, share it with millions of investors on M3

See around 20-25% growth in Henkel's biz ahead: Jyothy Labs

K Ullas Kamath, deputy managing director of Jyothy Laboratories says, he expects minimum of 20-25% growth in Henkel’s business going forward.

Post your opinion here

 

0

Tweet

Share on Tumblr

ALSO READ See latest News about Jyothy Laboratories See previous management interviews See what other Experts & Brokerages are saying about Jyothy Laboratories Jyothy Labs BSE | NSE 29/05/12 Are Mutual Funds betting on Jyothy Labs?

In June, Jyothy Laboratories bought Henkel AG's majority stake in its Indian subsidiary for Rs 617 crore, including debt and preference shares.

In an interview to CNBC-TV18, K Ullas Kamath, deputy managing director of Jyothy Laboratories says, as far as integration is concerned, the company is happy. "We have successfully done the integration process. We have taken over production, sales and distribution and marketing has already been in our control," he adds.

He expects minimum of 20-25% growth in Henkel's business going forward.

Below is the edited transcript of the interview on CNBC-TV18. Also watch the accompanying video.

Q: Recently, there were some reports suggesting the reason your stock has been under pressure is because of this integration with Henkel. It must be in its last stages now. Can you take us through how it's been? When do you hope to actually finish with the integration?

A: Any integration process is a very painful exercise for any company, especially a company of the size of Jyothy Laboratories, 27 years old. Henkel has been in India for last 25 years. Integration is a painful exercise, especially when it comes to production or sales and distribution and marketing and a lot of cultural issues.

As of now, we are almost five months down. We have successfully done the integration process. We have taken over production, sales and distribution and marketing has already been in our control. So, I would say that Jyothy Labs is extremely happy the way it has gone about as far as integration is concerned.

We are already seeing the results- reduction in the expenditure, procurement and production cost has come down. It has been showing in our quarterly numbers as well. So, the pain is already behind us now. We are looking forward to good numbers.

Q: Just wanted to concentrate more on Henkel in terms of turnaround for the company in particular because that seems to be a key overhang for the stock. What do you expect in terms of turnaround for the company? When do you expect it to start making profits? How has the intensity been in the detergent business?

A: As far as Henkel's present situation is concerned, when we took over the company, it was negative 4-5% EBITDA margin. As of now, we are seeing upward of 5% EBITDA margin. That's a swing up of about 15%. That has come entirely because of Jyothy's efforts.

I expect minimum of 20-25% growth in Henkel's business going forward. As of now, run rate what we are giving month-on-month looks like 20-25% growth in the coming years should be very much achievable.

Q: What's your total debt for Jyothy Labs at this point in time? We understand that you have taken a Rs 500 crore debt for this acquisition of Henkel. We also understand that interest burden will be borne by Henkel. Can you take us through where it currently stands at? When do you look to retire some of it?

A: The total acquisition had cost us about Rs 800 crore. Out of that, we had Rs 300 crore with Jyothy and Rs 500 crore we have borrowed. As of now, the interest is serviced by Henkel business itself. That indicates that the business is able to service the interest.

Going forward, some of the assets, which we have put on the block, good enquires are coming in. We will be able to retire Rs 150-200 crore debt probably in couple of quarters and bring it down from Rs 500 crore to Rs 300 crore. We will repay the balance over the period of next three-four years. We are now comfortable with the debt on our books because the service is being serviced by Henkel business. So, it might take us three-four years to retire the entire debt.