Honasa Consumer has denied accusations by a distributors' association regarding unsold inventories and unsettled credit notes, and issued pointed clarifications on the concerns raised, on November 21.
The All India Consumer Products Distributors Federation (AICPDF) had complained about large unsold inventory, causing a financial burden of Rs 300 crore to distributors. The company has denied the allegation, and said that the distribution value-chain carried a total inventory of Rs 40.69 crore, as against the quoted figure of near-expiry inventory by the association.
The company said it is shifting to a single-layered distributor structure, which has been implemented across 70% of the Top 50 cities. Concerns arising out of the transition have been addressed, Honasa said. "We have actively and transparently addressed our transition to a direct distribution model during our results for Q2FY25, proactively taking back inventory from discontinued distributors." Out of the total returns worth Rs 63.52 crore, the company has received returns worth Rs 41.21 crore in its warehouses, and the balance is in the process of
being picked up from distributors, it said.
The charge of unsettled credit note worth Rs 50 crore has also being denied by Honasa, stating that only Rs 4.73 crore worth of claims are pending for settlement.
"Over the past few months, we have actively collaborated with our channel partners to ensure a seamless transition, focusing on healthy RoIs for them, and supporting our growth ambitions," Honasa said in a statement.
Honasa added that receivables from distributors have reduced from Rs 46 crore as on March 31 to Rs 25 crore as on September 30. "Amount collected from distributors over past six quarters has been consistently healthy, and stands at 94% of sales (inclusive of GST)," it added.
The company quoted Nielsen data to show that Stock Turnover Ratio has improved from 35 to 27 days in the last one year. "This directly disproves the claim of high inventory in retail," Honasa added.
Shares of Honasa Consumer are down by 1.5% in early trade on November 21, after seeing a sharp selloff over last few days, after the earnings call. Honasa added that the company adheres to high governance standards, and is audited by one of the Big 4 firms.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
