Thank you, Hitesh. Hello and good afternoon, everyone present on the call.

I, on behalf of ICICI Securities, welcome you on Jyothy Labs Q4 FY26 earnings call. I would like to thank the management to give this opportunity of hosting the call.

From the management, we have with Ms. Jyothy, Chairperson and Managing Director, and Mr.

Pawan Agarwal, CFO. I now hand the call over to Jyothy ma'am for her opening remarks.

Thank you.

Thank you, Ashutosh. Good afternoon, everyone, and a warm welcome to the Q4 and FY26 earnings call of Jyothy Labs Limited.

Our financial results and investor presentation are available on our website and the stock exchanges. I trust you have had the opportunity to review them.

Let me start with the broader environment. FY26 was a year of volatility for the FMCG sector.

Urban demand was uneven for a large part of the year. At the same time, input costs remained elevated, with a sharp increase towards the end of the year due to the West Asia situation.

Despite these headwinds, we maintained steady volume growth. This was supported by calibrated grammage actions and a gradual improvement in demand, especially in the second half of the financial year.

Rural markets remained relatively resilient, supported by monsoons and government spending. GST rate cuts also helped improve demand, particularly in personal care segment from the third quarter onwards.

For the full year, our revenues grew by 3.5% in value terms and 6% in volumes. Fabric care grew by 8% in value and 9.5% in volumes, led by strong growth in liquid detergents.

Liquids nearly doubled during the year. Dishwash declined by 1.3% in value despite 6% volume growth, due to intense competition, price cuts, and higher grammage across market.

Personal care recovered well, with the Margo franchise growing by 5% in value and 1.6% in volumes. We expect FY27 to be a stronger year for the segment.

In household insecticides, our focus was on reducing losses and improving the mix. While HI sales declined by 1.3%, losses reduced significantly from 25 crore last year to about 5 crore this year.

Q4 saw a mixed demand environment. Consumption remained steady overall.

We had started seeing early signs of recovery, particularly in the urban markets, after the GST changes in September. That trend continued into Q4, but towards the end of the quarter, the situation became less predictable due to the developments in West Asia.

While this region does not have any material direct impact on our revenues, the indirect impact through crude prices, packaging costs, and currency movement is significant. Crude prices moved up sharply, and that has started reflecting in key inputs like LAB, PP, and PE.

Packaging costs alone account for nearly 15% to 20% of our material costs. As stated earlier, around 50% to 60% of our inputs are crude-linked, directly or indirectly.

Therefore, a sharp increase in the crude prices, along with a weaker rupee, has put pressure on the overall cost structure. Looking ahead, there is some uncertainty.

Higher crude prices could keep inflation elevated and may affect consumer spending. This is also a risk to rural demand if farm income gets impacted in the coming quarters.

That said, demand conditions through most of the Q4 remained stable, and we saw gradual improvement in the consumption, especially in urban markets. Fabric care delivered strong growth with 14.4% value growth and 17.8% volume growth.

Both main wash and post wash contributed. Liquids continued their strong momentum, while powders and bars also supported the growth.

Our key brands, Henko, Ujala, Mr. White, and More Light, performed well.

Dishwash saw a 5% volume growth, but value growth remained flat. This was largely due to price reductions, grammage increases, and promotional offers.

Competitive intensity remains high, with several players reducing MRPs and offering more quantity at the same price. During the quarter, we strengthened the Exo portfolio with the launch of the bio-enzyme based dishwash formats across formats.

Personal care saw strong recovery. The segment grew by 20% in value and volume in Q4.

The impact of GST-related disruptions seen earlier in the year fully settled, and demand improved meaningfully from December onwards. The Margo franchise performed well, supported by both core variants and refreshed pack for Margo Original.

This will help improve visibility and support future growth. Household insecticides grew by about 3% in value.

While coils continue to decline, growth in liquid vaporiser more than offset this. The mix continues to improve, with LV now about 55% of the portfolio compared to 50% last year.

This is moving the segment closer to profitability. Channel trends remain consistent.

Modern trade, e-commerce, and quick commerce continued to grow strongly. These channels are becoming an increasingly important part of the portfolio.

General trade also continued its recovery in Q4 with growth across regions. Let me now cover the financial performance.

For Q4, revenue stood at 717 crore, up 7.7% year-on-year. Gross margin was at 45.2%, down about 400 basis points, driven by input cost inflation and lower realisations.

Employee cost was 11.9% of revenue. Other expenses were at 12.8% of revenue.

A&P spend was 7% compared to 8% last year. EBITDA margin stood at 13.5%, down by about 330 basis points year-on-year.

For whole year 2026, revenue stood at 2,944 crore, up by 3.5%. Gross margin was 47%, down 320 basis points.

EBITDA margin was 15.3%, down by 230 basis points. PAT stood at 333 crores.

Net working capital improved to 15 days, a reduction of four days. Remained debt-free with a strong cash balance of 1,000 crore.

The board has recommended a final dividend of ₹3.5 per share for FY26. Input cost pressures increased sharply towards the end of the quarter.

We have taken selective price increases in March, and their impact will be seen in Q1 FY27. We may take further actions depending on how input costs move.

However, given the current demand environment, it is difficult to pass on the full impact of cost increases immediately. This is especially true in lower-unit packs where price points are fixed.

As a result, margins are likely to remain under pressure in the near term. Also, there is typically a lag between cost increases and pricing actions.

We will continue to manage the margin pressure through a mix of pricing, cost control, operating leverage, and calibrated media spends. Looking ahead, the environment remains uncertain.

Input costs, currency movements, and geopolitical developments will continue to influence the business in the near term. We expect the full impact of recent developments to be visible in Q1 FY27.

Our focus remains on scaling recently launched NPDs, improving general trade productivity, and sustaining volume growth amid price hikes, while maintaining brand investments in a calibrated manner to support medium-term growth. We remain cautiously optimistic about FY27, while staying watchful of the external environment.

Before I close, I would like to thank our teams for their commitment, our trade and distribution partners for their support, and our investors for their continued trust. With that, I conclude my opening remarks.

We'll now be happy to take your questions. Thank you.

Hi, team. Congrats on a decent set of numbers.

Three, four questions from my side. First is on the fabric care.

Excellent numbers on the volume front, around 18% volume growth. I think once-in-a-lifetime opportunity is available with regards to conversion from powder to liquid.

What more can be done so that we grab hefty market share in the liquid detergent segment? I understand you have doubled the business size in FY26, but still on a lower base.

What more can be done from here onwards? I think couple of products you launched, that is Ujala conditioner, Henko conditioner that you launched.

I just wanted more insights from you on that. Second question on the dishwashing segment.

Due to competitive pressures, I think you have increased the grammage from the third quarter onwards. Margins have collapsed out over here, from 18%, the margins are down to around 10% for the quarter.

What action can we take so that the margin gradually recover? I understand there are challenges with regards to competition as the inflation front.

One of the actions that you have taken is launch of maybe Exo liquid, if you can elaborate a bit. What is the game plan, since you already have Pril in the basket, how do you plan to boost both the brands?

Third question is on the HI piece. Now, since you have turned profitable on HI during this quarter, what is the long-term growth path, as well as profitability path for the HI piece from here onwards?

Last question, madam, is on the cash balance that we have of approximately 1,000 crore that we are holding. I think we have been scouting for acquisition for a while.

What is the hindrance, or what is prevailing us from doing an M&A activity? Thank you.

Hi, Vishal. Fabric care is the first question that you asked.

Liquid detergents for us has done really well. It is also to note that segment is growing, and the detergent powder segment as such is seeing a marginal degrowth because you see most of the conversions from powder to liquid happening.

We have grown healthy. The thing is that we have been investing on the brands, and that has helped us yield that results.

It's not just on liquid detergents, it's across the fabric care portfolio also. Our Henko also has done really well.

Our Dr. Wool, the liquid detergent for woolen clothes and special clothes that we introduced in the third quarter also has done well.

If you see fabric care across, we have done well, and very happy to see double-digit growth also on that. That will continue because that market is going to adopt.

More and more people are getting into liquid detergents as it makes it easier for them to use. It's also milder on the hands.

You will see a lot of action in the liquid detergent space, and we are there to grow along with that. On dishwash, yes, the grammage increases have happened, and the price reductions have happened.

If you see compared to last year versus this year, that has been the trend. We are happy to say that we have maintained the market share, and we are growing, in fact, in many markets.

That's good. For some time it will remain, especially because of the West Asia crisis that will be there for some time.

We are doing well in dishwash, no concern there. On the HI—

Yeah. On HI, as— Madam, on this Exo liquid and Pril, if you can just elaborate.

What is the game plan, since already you have Pril in the dishwashing liquid, the brand is already there. Now you introduce Exo liquid out over there.

Just wanted your thoughts. What do you plan to scale up the brand also, Exo liquid specifically?

Yes. Exo liquid is quite differentiated compared to Pril.

Pril is at a premium, and Exo will be in direct competition with the market leader. We have bio-enzymes included in the formulation.

It makes the washing process easier. That is the differentiator.

Our focus is also to grow because you see the dishwash liquid segment also growing. If you see across formats, the liquid segments are growing, and we want to capture it in every possible way.

For a Exo bar user, if you see, Exo not being there in liquid was a bigger gap, rather. For any Exo bar users to upgrade, it was high time to launch Exo liquid.

That is one. Exo liquid is antibacterial, and it has bio-enzymes.

Pril is more on degreasing and on premium liquid segment. That is the differentiation, and we wish to see that both the brands grow.

We will be investing on both the brands, yeah.

On HI, your specific question on the profitability and long-term plans, so as we had stated some three, four quarters before that we are working on a plan to turn this category profitable, and that plans has started delivering some results. In terms of our focus, we have been focusing more on liquid vaporiser, and we have taken some aggressive price increases on coil segment.

That of course meant some decline in volumes and value in coil, but that has been more than offset by liquid vaporiser. Our NPD Maxo Aerosol is also a profitable product and is doing reasonably well, although it's too early to comment because they are only a couple of quarters the product is available.

LV in quarter four, if you see, the volume growth has been in high teens, and for the full year also, if you see, we are almost touching double-digits. The strategy seems to be playing out well, and we had indicated that by the end of FY27, this category will be profitable, but it seems that if the last two quarters are anything to go by, I think we are on the right track, and probably it can help us deliver the profitability target much earlier.

Your last question around cash balance of 1,000 crore, yes, you are right, and we have been scouting for right assets, and very aggressively we are looking for right asset. As we have mentioned earlier, we are going to pick up the asset which actually adds to the overall shareholders' value.

We are in active dialogues with couple of them. Let's see how it pans out, and at an appropriate time, we'll let the street know about our acquisition decision.

Thank you.

Thank you. Thank you for the insights.

Just a last question on the overall margins front. Although you highlighted uncertainty with regards to a lot of things, but Madam, if you can broadly provide a guidance for FY27, can we assume our margin band of 13.5% to 14% for FY27?

That's the broader margin band that you're targeting?

Vishal, your question is valid, but at this point of time, looking at the situation, we are all aware, the way input prices and packing material prices are behaving, the way crude is behaving, we are also taking price increases. All these factors put together, there is extremely high volatility.

At this stage, we'll be constrained to give any guidance on margin front. Maybe once the external environment settles down a little bit, hopefully it should in couple of quarters' time, then we will be able to guide the street on our margin target for FY27.

Got it, sir. Thank you.

Wishing you all the best. Thank you.

Thank you, Vishal.

Hi, thanks for the opportunity. Just to continue on the previous participant question, fabric care, as we know, it's a clearly make-or-break segment for the company.

How typically is the pricing in the detergent category versus Surf, Tide? Are we at a premium or a discount?

Also, I had read somewhere that the prices of the liquid detergent have collapsed because of the new players who have entered the market. How is Henko's position out here?

What steps are we taking to defend the market share in the fabric care segment? My same question would be valid for the dishwashing segment as well.

Yeah.

Hi, Rishab. Fabric care segment, all of our brands that are operating, it is not just Henko, we have various brands at different segments, and all are priced at parity to competition.

In fact, in some markets, we are at premium as well. That said, I hope that answers your question there.

Liquid detergents, yes, it has been competitive. The intensity was there from local players as well.

As we go along, consumers also see where the quality is. There are many brands, especially at the local level, that they had hardly anything in the product, and the pricing was at a very low level.

End of the day, consumers know what quality is and which brand to be chosen. There, I think, if it were to be this thing, then people would have chosen only locals over branded players.

The thing that all the organised players are growing handsomely in the segment, which also means that slowly that trend will change going forward. Consumers will definitely look for quality than just water.

That's what I believe in. The same goes for dishwash as well.

Okay. Since we talk about brands differentiation compared to the competition, we said that what we offer is differentiated with what competition is offering.

My question is when you say differentiated products, what exactly are we talking about? Is it only the effectiveness of the product, or it is the branding differentiation?

What are we talking about?

It's the positioning, Rishab. I don't think I can sit and explain each brand because there are many in the fabric care segment.

Each one stands for at a differentiated positioning. No,

this question is not just related to the fabric care, it's the overall Jyothy Labs I'm talking about.

Certainly. What I'm saying is each brand has a different positioning.

It's what the brand speaks is what the brand delivers. That is where it is.

We are differentiated. Now, I cannot sit and explain on the call what each brand stands for if you see, but the spends that we do, the communication that reaches the consumer, they are differentiated compared to competition, right?

At pricing, we are at similar pricing to that of competition. Hence we've been that way since quite some time, and we have made our mark.

That's what I can explain right now.

Okay. My second question is suppose you do an inorganic acquisition, what are the things which you will investigate in terms of the work culture of the company, the profile of the customers, etc., and many other things?

What things will you investigate in the company?

The reason why we have not been able to announce any acquisition so far is the robust screening process, and we have a very robust and tight process through which we look at any potential opportunity. There are various aspects to a deal.

It is not just the cultural alignment, of course, this is an important element, but there are other factors also: your channel, the category, the price point, the consumer segment, the market, the presence on organised trade. All these factors we take into consideration while taking a call on a particular opportunity.

Okay. My last question is what we have seen that certain categories which reach let's say penetration of 14%, 15%, and then the slow burn rate starts, then the incremental penetration becomes difficult and a fight with the competition.

What I wanted to know, what are the strategies lined on gaining incremental share in our categories alongside fighting with the competition?

See, end of the day, you'll have to fight the competition, Rishab, there's no escape from that. The categories that we are present is very competitive in nature, and I've explained in my previous this thing that we are differentiated.

We'll keep spending on the brands, and our quality will speak for itself, right? Those are the parameters where you can fight, and if your consumer chooses you, it's a win for you.

That's all what I can explain to you on the call here.

Okay. Thank you, ma'am.

Thank you so much.

Thank you.

I hope I'm audible.

Yes, you are.

Yeah. I just wanted to understand one small thing about the margins.

It's more of a clarification than anything else. I just want to understand if some lower-priced inventory has helped us cushion the margin impact this quarter, or if we've exhausted all that lower-priced inventory and we've had to buy inventory at these elevated prices as of March even?

Maybe just to get an idea regarding that.

No, there is no such advantage of lower-priced inventory in this quarter. I think the raw material prices have been moving in upward direction, not a material impact as far as the lower-priced inventory issue is concerned.

Got it, yeah. Thanks a lot.

Thank you.

Hi, thanks for the opportunity. I wanted to ask about the divisions that we have: the fabric care, the dishwash, the personal care.

Do we have the business heads for them, or how do we manage, because they target to a different kind of the customer needs? Just wanted to understand this part.

Thank you.

The brand guys are different, that's all. Rest of the supply chain, the rest of the team are all common, Yogesh.

Do we have the business heads for each of the divisions or the segments as we call them?

No, not as a business this thing, but yes, it's only in one certain department that you have that way, but as a business, we combine and we give the results, yeah.

Right. Okay.

Right, thanks for this. Just one thing, wanted to ask one thing more if I can squeeze in.

For the personal care, do we intend to go in the beauty segment as well? Because soap and this as such, in case some beauty segments or products which you are thinking of coming in?

Not currently, we'll see if possible in future.

Right, thanks. Okay.

Hi, this is Sonal Minhas. I hope I'm audible.

Yes, you are.

Thanks for taking my question. My first question was with regard to the dishwash segment.

Just asking subjectively, have you seen the competition become less intense as we speak in the month of April and May, and moves sensitive in terms of pricing and volume launch in direction beta that you could share?

Sure. I am asking the question here.

Is it better now?

I was asking, have you seen competition become less intense in the dishwash segment in terms of pricing or grammage? Anything you can share there?

No, not right now. It's the same.

It's continuing the same way.

Got it, ma'am. Ma'am, second question with regard to the difference between the volume and the value gap.

Between last quarter and this quarter, the gap has widened a little more by a percentage point. Wanted to understand for next year, do we see the convergence directionally?

Anything if you could share?

Yes, you are right. Going forward, with the price increases that we are taking, I think the gap between volume and value growth would narrow down, and slowly it will converge.

For next year, we should assume that by the later quarters, the numbers should be in sync and tandem basically?

As I said, giving any kind of guidance at this stage is difficult, but the actions that we are taking right now, in the near term, this gap should reduce is all I can tell you.

Got it, sir. That is good enough for me.

My last question is with regard to the retail footprint of Jyothy as a brand. I think between last year and this year, just picking up data from your deck, you seem to have added a lakh outlets overall.

Just wanted to understand if there is broader guidance on states where your footprint is less, regions your footprint is less and you intend to have a plan of how many retail outlets you need to add to expand and fill the gaps in those areas?

We've been adding almost 50,000 to a lakh of retail outlets every year, and that is what will continue. That is across the country.

There's no particular geography or things like that. It'll be an across GT increase in outlets.

Got it. All right.

Thank you. All the best.

Thank you.

Hi, good afternoon, and thanks for the opportunity. Firstly, can you give us a sense on market share, particularly in liquids, soaps, and a liquid vaporiser for insecticides?

If any sort of sense you can give, that'd be very useful. How are we differentiating on the liquids now we see?

Yeah. On liquid detergents, we're seeing a huge amount of competition coming in.

How are we grow in this competitive environment?

We do not give the detailed brand-wise or category-wise market share data, but on an overall basis, we have protected our market share or improved it across various categories is all I can tell you. In liquid detergent also, specifically, we have done really well.

Our market shares have improved.

Understand. Any sense on competitive positioning of the products?

In terms of price points or where you're seeing the most demand at what price points, any sense would be very useful.

We have different segments, Aditya, that is, you have your premium, you have your mass, you have your mid, and we are priced at par with competition. Like Pawan said, we have either retained the market share or have improved that across brands.

Understand. No, I know about the different price points.

What I wanted to understand also a little bit more is you indicated that we're seeing a shift from sort of powder to liquids. Is this being also driven by being sort of more aggressive on pricing on liquids?

One of the things I am seeing in my checks is that price per use on liquids has now dropped below powders for equivalent brands. Would that be sort of a strategic choice?

Yeah. See,

if you see a few years back when liquids were introduced in the country, at that time, it was at premium to powders. It is just to induce trial, to make it more affordable, to see the benefits of liquid that such competitive pricing has been introduced in the market.

That has continued for some time. Maybe after couple of years, things may see a different picture in that segment.

Otherwise, for now, yes, it is very competitive.

Understand. Very clear, and thanks.

Thank you.

Hi. Am I audible?

Yes, you are.

Yeah. Sir, thank you for the opportunity.

Just wanted to ask, sir, how much has the price increase been taken in dishwash and detergent segment? How much inflation is there in the raw materials?

Just wanted to get some sense on how far are we from taking the full price increase to offset that inflation?

Thank you, Akash. We have, as I mentioned earlier, we have taken pricing action to the tune of around 4% in the month of March, the result of which should be visible in quarter one to a large extent, and full impact should be visible quarter two onwards.

Second, on the inflation side, our large part of our portfolio is impacted with crude or crude derivative inflation. There the impact is higher.

Also in packing material, we've seen in the last couple of months the crude-linked HDPE and PP going up, prices going up significantly. On packing material side also, there is an inflation impact.

Overall pricing increase, first action we have taken, and if required, we will take subsequent going forward, depending upon how inflation subsists.

Sure. Sir, if I were to sort of assume that current prices prevail in terms of raw materials, then, sir, how much price increase will be required to offset that inflation?

No, I cannot give that number just now. We are monitoring the price increases on the raw material side on a continuous basis, and depending upon the market situation and also the volume growth ambition, we have to keep all the factors in mind while taking any pricing decisions.

We are taking calibrated steps, and we'll continue to do so.

Sure, sir. Sir, this 4% price hike that we have taken, that is for both fabric care as well as dishwash, right?

At a company level, I'm saying,

across

various brand, categories, SKU. It's a mix.

I'm talking about the portfolio level.

Okay. Understand.

Sir, two bookkeeping questions. One is, sir, how much will be tax rate for us for FY27?

We will be going for 115BAA, rate should be around 15 25% to 26%. It should be hovering between 25% to 26%.

Right. Sir, capex for '27, will it be similar to previous year or a bit higher?

Similar. It will be in similar range.

Thank you.

Okay. Thank you, sir.

Hi. Good evening.

Just had a few questions. One was on the pricing that you just mentioned.

While you did give the weighted average number, I just wanted to understand that is this entire pricing in fabric and dishwash, or you are also have taken up prices in personal care?

No, as I said, Harit, this is across all the segment categories. The blended increase would be close to 4%, a little over 4%.

No,

I get that, Pawan, but I just wanted to check whether there have been increases in soaps as well. Just that's the question.

We have initiated, as I said, in the month of March, we have initiated. The effect would be visible in quarter one, including Margo.

Got it. Got it.

The second thing was on HI. If you could just help us understand this product mix or category mix, subsegment mix, whatever you call it in HI for the second half of this year.

Just wanted to understand that at what level of mix you've been able to kind of achieve these break-even numbers in terms of LV, non-LV basically?

Understand. No, what I'm saying is it is too early to draw any conclusion based on one or two quarters' number.

While the LV's share in the total HI has improved, if you look at last four to five, six quarters, it has improved slowly but gradually. Now, it is at 55%, and coil is 45%.

Also, when I say LV, the new launches, for example, aerosol and racquets, etc., I'm bunching together because the profitability is superior compared to coil. These products are doing well, and hence the ratio is tilted in favor of LV and others, whereas coil dependence is coming down.

Got it. Third question was really on these price increases which have been taken by yourself and the market.

Have these been broadly in line across most players would have taken similar levels of price increases in your key categories? Is that what you're witnessing, or players are using this as a mode to drive competitive intensity?

I would assume not, but just wanted to get your thoughts on it.

No, you're right. Your assessment is right.

It is in line.

It is in line. Got it.

Last bit was on the fabric care bit, exceptionally strong volume growth numbers. In fact, not even quarter four, even quarter three, numbers are very good.

While you mentioned liquids is 2x, but I remember it being a low-single digit share of your mix, if I'm not wrong. Correct me if I'm wrong, please.

Obviously the growth there, it's not really while it has driven a part of it, it would not have driven it entirely. If you could just give a flavor in terms of this acceleration in growth in H2, I don't want a number, but would it be primarily penetration-led or couple of categories like either premium detergents or mass detergents, something doing much better than the other, some color on that would be very helpful.

No, I understand from where you are coming, Harit. Overall, the fabric care category has been doing well for us, both in main wash as well as in post wash.

Detergent powder, liquid, bar soaps, our flagship product Ujala Supreme fabric whitener, fabric conditioner that we recently launched, you pick any product, I think we are doing a decent job across various products and categories within fabric care.

Got it. One last question was that any sense of apart from premiumisation, because there's also a lot of volume growth, apart from premiumisation, in terms of adoption, penetration, usage, overall category growths, have you also seen that lift up in the last two quarters?

Not for you overall, but just overall category growths, have you seen that pick up as well? Because you've definitely been gaining, but would you see category growths also really adding to that tailwind?

That category is definitely growing compared to powders, liquids are growing. That is what I can say, and that has been on a similar this thing through the year, this year, last year also.

Yes, we've done well. The powders have started diminishing, that is the main thing.

Yeah.

Perfect. Thank you very much.

Wish you all the best.

Thank you.

Hi, sir. Thank you for the opportunity.

Am I audible?

Yes, you are.

Yeah. Sir, just trying to understand, on the pricing side, while you highlighted the 4% price increase at a portfolio level, if I look at Q4 versus Q3, the price reduction or the difference between volume and value has further gone round by a percent or so.

Is that largely to do with some of the mix or some schemes that you might be running? Is that the reason, sir?

It's a combination of a lot of factors, not just schemes. Your grammages, our quantity, then MRP cuts, it's a combination of a lot of factors across different segments and categories.

When you have taken price increase of 4%, have you reduced the schemes as well? When you say 4%, everything is included in that?

I'm saying overall impact around 4%, which we took towards second or third week of March, large portion of it, which should be visible in quarter one and quarter two at a totality level.

That's a combination of you might have reduced some schemes as well as ASP increase.

Pricing action, basically the net effect of pricing decision would be about 4%.

Okay. Sir, on the margin thing, while I understand it's a volatile scenario, but when I look at current numbers and we would be carrying some bit of an inventory or which would be an old stock inventory, and you indicated not much of benefits would have come.

If I think of from a two quarters down the line, are we in a scenario where the inflation concern is as on these reasons while we do have taken price increase, could there be a scenario in the near term that this exit margins of Q4 could be slightly lower in the near term? Is that directionally if you can help will be much better for us to understand?

While I take your point on the volatility scenario, but just to model it, it will be better for us.

No, fair question. As I indicated, rather as Jyothy indicated in her opening remarks, near term, we are seeing margin pressure.

Quarter one, definitely there is some pressure on margins. It's highly linked to what happens on the crude and crude derivative prices, which would have a bearing on our pricing actions.

For the current quarter, there will be some pressure on margins.

Sure. Lastly, sir, is there any structurality change in the margin profile because of maybe liquids gaining significant traction in the recent times in the fabric category, or competition is there in the dishwash, but that was there earlier also.

This quarter saw a significant fall in the EBITDA margins. There is no otherwise a structural change which would probably result in a slightly lower margin profile from here on one should expect, excluding the crude scenario which we are seeing right now?

No,

this margin drop that you are seeing is largely driven by the crude or crude derivative prices. Structurally, there is no major change in the business construct of the company.

Lastly, sorry, on the supply and sourcing side, I just wanted to know how are we positioned relative to some of the smaller players? Do we have some advantage over there, and you're seeing on the ground some market share gains as from smaller players, especially on the liquids, fabric or powder, if you can touch upon that and our ability to source is slightly better just on these points qualitatively?

Our volume growth numbers tell you the story, we would not like to comment beyond that.

All right. Okay.

Sure. Got it.

Theek hai. Thank you, sir.

Hi. This is Percy here.

Just wanted to ask regarding your gross margin this quarter. It was 400 bps down.

Just trying to understand the reason for this because the input cost inflated only in March, and typically there is a lag between the crude prices going up and the derivatives going up, plus there is an inventory or some kind of cover that companies have. Why in this quarter gross margin has gotten affected by 400 basis points?

No,

good question, Percy. There are two reasons for this.

One is, of course, some bit of inflation did hit us in quarter four. On the pricing side, overall lower sales realisation has also impacted margin.

As we have a typical two to three months of lag between the cost increases on the input side and the price action that we take on the sales side. That has impacted.

The sale price increase decision was taken towards the end of the quarter, while the lowering of average sales realisation was happening through the quarter. Hence, you see some impact in gross margin in this quarter.

Also,

we have given extra grammages and all that comparative to last year. That is also there, Percy.

This extra grammages is something driven by competitive pressure, or it's something that you have done even though the competition has not done the same thing?

No. It is a competitive reaction.

Also, as we speak, last year versus this year, there's a huge price reduction also that had happened. If you see quarter-on-quarter, last year's price versus this year, there's a huge difference.

Even if we have grown by volume, the pricing action and the grammages, these put together along with your other inflated raw materials, all of this together converged in this quarter, so that is why you see that.

Because just trying to understand this a little bit in detail. One is, of course, In some categories, there is a GST-led grammage and lower price, but detergents did not have that.

If I'm also looking at HUL results, they have not seen a significant kind of margin pressure. Just wanted to sort of put across these data points and see what is happening.

Where I'm coming from is even if I see the last crude price cycle a few years ago, our margins had come down from 16%, 17% to a 10%, 11%, and EPS, I think, on a full-year basis, not just for one quarter, had fallen approximately 30% or something like that. Just wanted to understand why this kind of impact on bottom line happens to us much more than other companies, even adjusted for the product portfolio?

For example, instead of looking at HUL overall as a company, if I look at only the home care, in the past cycles, we do not see such a big impact, or if we look at other FMCG companies, we do not see such a big impact. Just wanted to understand what is different for us that we are sort of facing the brunt of this.

Of course, it reverses when the crude price goes down and the margin does come up, not denying that. A few quarters can be very painful in the interim, and I was just trying to understand what is the reason for that.

No, fair question, Percy. As we have mentioned earlier also, about 60% of the business is linked to crude and crude derivative.

Also, if you look at the key raw material LABSA, the prices have gone through the roof in this quarter. If you look at January, and if you look at prices today, they are up by 60%, 65%.

If you look at HDPE, PP, packing material item, which is roughly 15% to 20% of our purchases, that has gone up by about 50%, 55%, and that has happened in March and April. All these factors plus the lower average sales realisation has affected the margins.

As I indicated, quarter one is also going to be some pressure, while calibrated pricing action will be taken, but it is all linked to how input prices behave going forward.

Yeah. Another reason, Percy, is almost 70% to 80% of our portfolio is into home care, and if you see, while the rest have the other segments also, hence you don't see as much.

Apart from that, the coil as a segment is also margin decretive. That is an addition to us.

We have performed very well on liquid. While we are trying to correct that segment as well, as you see.

These are the factors which impacts us more than for others.

Got it. Why not then take a higher price increase?

4% seems very low.

We're also keeping an eye on our volume retention because the volume growth momentum that we are maintaining, while in the near term there could be some pressure in margin, but we want to retain the volumes. We have to strike a balance between the two.

I'm not saying one versus the other, it will be a combination of both. Again, 100% of the input price increase, as cannot be passed on to the market.

Got it. Thank you so much.

Thank you.

Thank you so much. We really appreciate your continued interest in Jyothy Labs Limited.

Thank you so much. Have a pleasant evening ahead.

Thank you.