Jyothy Labs Limited (532926) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Jyothy Laboratories Q1 FY '22 earnings conference call hosted by ICICI Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Manoj Menon, Head of Research, ICICI Securities. Thank you, and over to you, sir.

Hi, Melissa, thank you. Thanks for the introduction. Hi, everyone. Good morning, good afternoon, or good evening, depending on which part of the world you are joining the call from. At ICICI Securities, it's our absolute pleasure to host the management of Jyothy Labs Limited for the 1Q FY '22 results conference call. The company is represented by Ms. M.R. Jyothy, Managing Director; Mr. Ullas Kamath, Joint Managing Director; and Mr. Sanjay Agarwal, Chief Financial Officer. Before I hand over to the management for their opening remarks, and after that, we'll open for Q&A, just a couple of lines from our side at ISEC Research on how do we view Jyothy Labs as a company and as a stock. We have a positive stance on Jyothy Labs business and the stock for a long period of time, and it is still intact. One of the things we have noticed over the last 12 months is given the multiple challenges, which most businesses irrespective of the industry, has faced, we believe Jyothy is one of the few companies which has faced the challenges a little better than many in the peer group. Particularly, even using times like this to improve the cash generation and working capital management, because many times we end up focusing more on the P&L and less on balance sheet. I just thought I'll just call out that. Over to Jyothy for the opening remarks, and we'll open for Q&A after that. Over to you, ma'am.

Yes. Thanks, Manoj. Good afternoon, friends. We had a fairly good quarter in terms of sales, and registered a 21% -- 21.4% growth on a positive base of last year. All our categories that we operate in have grown in double digits. So I'm happy about it. I will now hand over to Sanjay, our CFO, to take you through further in detail.

Thank you, Jyothy. Good afternoon, everyone, and thank you so much for taking time to be with us on this call today. I'm happy to share our healthy financial performance for the quarter ended June 30, 2021. And before we begin, I want to thank all our team members who in spite of fear of COVID have gone beyond their call of duty to make sure that the company is able to service its consumers 24/7. And to briefly talk about the uncertain business environment, which we experienced during this quarter due to COVID resurgence, as all of you are aware, the second wave was much harsher and much broader. This time, the fear of virus was much more pervasive on the ground, and hence, it impacted the service levels or in distribution. So that was 1 key impact the business had. However, the companies and consumers both were better prepared this time. I would say, better prepared to manage their workforce and factories did not go into shut down or lockdown like what we had seen in the last year. So from that perspective, there is a better awareness of what needs to be done. And good thing is that the consumer demand was intact. However, the mood was grim. Restrictions were more localized. We increased our channel inventory. So no stock out during the localized lockdowns happened. And as we speak, given vaccinations are available now, hopefully, the COVID impact should be behind us. In terms of talking about a market scenario in terms of channels, general trade, neighborhood grocery stores have led the growth, and e-commerce channel sales have been increasing fast, which now constitute -- contribute approximately 4% of our total sales. In a way, e-commerce has become now the channel of choice for many customers -- consumers. Modern trade and CSD sales have been slow as consumers avoided large-crowded stores and -- but due to the lockdown, consumers have found it convenient ordering online or even placing orders on WhatsApp to neighborhood stores. And that's the reason why we are seeing the resurgence of general trade, neighborhood stores has come back. And in fact, they have been reconsidering their business model towards more digital, and they're becoming much more relevant in the lives of the consumers. And seeing that, we have been increasing our assortments and coverage in general trade quite aggressively. A few comments on our strategy. We continue to focus on our consumer-centric model, i.e. focus on distribution, marketing, increasing spends on media, relevant innovation, cost focus that we have on all our P&L items and sustainability. With this, we are building economies of scale backed by our 23 manufacturing locations across India. We see opportunities both in existing portfolio and new product launches. We are focusing on high-margin business. And at the same time, also focusing on LUPs to seed in into newer geographies and first-time consumers. So friends, as we increase our distribution, we are strengthening our brands, we are driving innovation, we are targeting higher growth and profitable growth. So one of the reasons the high performance, what we have seen over the last few quarters, it's backed by the efforts or initiatives we have taken on distribution, which is technology-like distribution, getting more into the rural India, appointing more sub stockers, a focus on van operations. And these all have started to give good results, implementing SFA. All these things which we did 12 to 18 months back have started giving a lot of good results and entire focus is on execution. I mean that's a single-minded focus what we have is to drive consumer engagement and product availability, which is the most important thing in our minds to drive more sales. And frankly, our essentials portfolio is also helping us because it's a day-to-day life products what we sell, and consumers have great connect with our brands and our depth in our distribution, the brand proposition what we have is helping us gain market share. And while we are seeing some margin pressures, we will work to find balance between the volume, EBITDA margin and market share. Hence, our focus on 6 power brands and gaining market share in those categories through innovation, distribution, higher marketing spend will continue to aid us to deliver better than industry volume growth. Commenting on our financial performance. You may -- all of you must have seen our presentation and our financial results. During this quarter ended June 2021, we have grown in high double digits of 21.4%. Just to break that up, the volume growth is at 16.6%. And the balance 5% is by higher price realization, which is by increase of MRPs or reduction in trade scheme. So 21.4% is overall growth with breakup of 16.6% volume growth and 5% value growth what we have got. This would not have been achieved without our team members' agility and resilience they have demonstrated in difficult times. And as we all know, April and May were very difficult, but teams have taken it that they really wanted to continue the momentum what we have built. And also important to note that this is on back of positive 4% growth we had in last Q1 FY '21. So overall, a good set of results. All our categories have shown double-digit growth. Fabric Care has grown by 27%. Dish Wash has grown 22%. HI has grown by 12.7%. And Personal Care at 13.5%. And even if we see on a Jan-June basis, we have posted high double-digit growth across all our categories as well. And also, if we see on a 2-year quarterly CAGR is also in double digits. So whichever way we look at it, I think the growth is -- the revenue growth has been quite consistent in good double digits. And this has also been achieved on back of not changing our business strategy in the sense -- or business hygiene. Our pipeline stock with our distributors remain at 8, 10 days, which we brought it down with a lot of hard work, and the entire business has been done on a cash basis. So that is something very important for us, and we will continue. And with that principle in mind, we have been doing a consistent volume growth. And what's also most heartening to see is the consistent gain in our market share across all our categories, which actually validate our strategy, what we have -- what we are continuing with as of now. In terms of key category performance, Fabric Care is doing well. Post Wash, which is Ujala Fabric Whitener and Crisp & Shine, is sequentially doing better, but it has yet to grow over pre-COVID levels, which will happen, I guess, next couple of quarters as things become normal, we should be back to pre-COVID numbers. Interestingly, we have launched, during this quarter, keeping in mind the consumer preference and premiumization trend, we have launched Ujala Liquid Detergent, which with a unique property of dissolution in the liquid form, and it has been received very well by the consumers. So that's a new launch which we did during the quarter. Second category, Dish Wash category, both Exo and Pril continue to do well. There is a tailwind because of the hygiene focus and our unique brand positioning. That's helping the entire Dish Wash category and seeing the gains in market share and the performance and the consumers connect, we have been increasing our market -- sorry, our marketing spend both in Exo and Pril. In HI segment, seasonal sales were good. And our automatic liquid vaporizer machine is picking up well. We have seen growth across different markets. And as we continue to focus on LV sale, the whole category has been aided with consumers approach towards preventive health measures. And that's something which has continued for the last 4, 5 quarters, and HI for us has done, again, good numbers for the last 2 quarters and this quarter as well. Finally, our Personal Care segment, which is Margo franchise. A lot of ground activities are underway because this is our 100th year of Margo. So it's a time of celebration for us with the Margo consumers. And we have been advocating the natural benefits of neem, and that's doing pretty well. On margin perspective, there is a decline of 3% in gross margin, which has impacted EBITDA too from our historical 15%, 16% EBITDA margins to 12% this quarter. But this is an anomaly. And we -- it will get corrected. We will be back to our historical numbers. As all of you know, all key input prices, whether it is LABSA, which is the acid slurry, palm oil, HDP, paper costs, everything has increased sharply. So our input prices as a percentage to turnover has increased by approximately 10%. We have passed on 50% of that price increase, which is 5% to our consumers. And so 5% has been passed by way of MRP increases or reduction in the trade schemes. 3% -- 2% gain we have got because of the manufacturing or material efficiency because as we do a higher volume of, say, 18%, 20% since manufacturing is done 85% in our own factories at 23 locations, we do get manufacturing efficiencies and a lot of our cost is fixed in that manner. So 2% gain we have got there. And the balance 3% is the impact of what we have got on gross margins. And we believe that this approach is fair. We can only take calibrated price increases and do reduction in trade schemes to get a higher price realization. The fact is that we are getting good demand of our products as well as strong market share gains. And hence, we don't want to break the momentum which we have built with a lot of hard work. But I guess, as we go along, we expect higher margin products, like Personal Care sales, Margo sales, liquid vaporizer, Fabric Care, Post Wash sales, they will offset some material cost pressure as well. So overall, our margins need to be looked from the perspective that our Post Wash, Fabric Care sales, which have higher margin than company average, it has not picked to pre-COVID levels, hence, once things normalize, we should get back to our earlier margin profile soon. Our media spends, A&P spends have been higher than last year. As last year, only strategically placed -- strategic ads were only done. And we believe by spending or investing behind our brands is going to be a long-term gain for us. And in spite of all the pressures, we continue to increase our A&P to continue to see a good business momentum. So in summary, we are shifting gears and we are preparing for the future, which is evident from our higher revenue growth of, if I look at it, last FY '21 quarter 1 growth of 4% and Q2 by 8% growth, Q3 at 15%, Q4 at 27%, and then this quarter at 22%. So all in all, we have achieved this -- I mean this outperformance is driven by our market share gains as well. And we'll continue to focus on investment behind our power brands to drive growth and continue our thrust on relevant innovation, premiumization, use technology to drive efficiencies. And finally, but not the least, is focus on quality distribution to drive growth. With that, I finish my opening remarks. We are happy to answer any questions or clarifications that you may have. Thank you.

[Operator Instructions] We have the first question from the line of Manoj Menon.

I have a couple of questions actually upfront. I've got a few more, which I'll come back later in the queue. The first on the working capital improvement, while we get this statistic every 6 months, if you could comment about the trajectory of what we saw in last year, how is it currently? So that's one. Second, while Sanjay did mention this in the opening remarks about mix and its possible impact on gross margins, any quantification on that? So what I'm just trying to understand is mix needs to be looked at from a brand point of view, category point of view, channel point of view. And is there a mix headwind also in the gross margin decline? Or is it just a competitive scenario of what we see as the residual gross margin decline currently?

Yes. Manoj, to answer your first question, as I said, the business hygiene needs to be kept -- or we have kept the business hygiene at the same level. So working capital days have remained same what we had done in March. So our inventories are at lowest point, receivables only pertains to modern trade and CSD. And so working capital remain at the same numbers. In terms of your second question on gross margin, yes, gross margin, see, we have to see -- so there is one element which is pricing power, and we have been -- we see the price elasticity and competitive dynamics, and we have been able to increase our prices in a manner that the consumption and the volumes don't get impacted. So that is what we have done. Since we have a good connect or great connect with customers because of our products, we know at what price point the consumers will be able to absorb that. So we have been able to do that. In terms of the overall portfolio gross margin, yes, the product mix do make a difference. So as I said, the Fabric Care, Post Wash, which is 15%, 20% of our business that is still to come back to its normal levels. So once it happens, the overall gross margin -- as of now, yes, it has got negatively impacted. But as we move along, it will be -- it will contribute positively to our gross margins also. So we'll see the improvement in gross margins coming in because of the change in the product mix. And channel, definitely modern trade and CSD have not been contributing much. So there will be some uptick because of that as well. So all in all, we are not -- we are taking all our efforts to make sure that we get back to our old -- our historical gross margins very soon.

Just 1 quick follow-up, if I may. When you say Fabric Care or when you refer to Fabric Care, it includes the core Ujala as well?

Yes, yes. I'm sorry, talking about Post Wash, which is Ujala Fabric Whitener and Ujala Crisp & Shine.

It includes both?

Yes, sir. That's right.

We have the next question from the line of Abneesh Roy from Edelweiss.

My first question is on e-commerce. So you have done well there. My question is, in the last 1 year and not necessarily this quarter, how is the gross margin in that part of the channel versus the overall company level? And at the EBITDA front also, if you could comment, I know it's difficult to apportion the advertising spend. But you must definitely be seeing, on an overall basis, how is the proximity in e-commerce? And once vaccines, et cetera, happen, do you see modern trade taking share back from e-commerce or modern trade will take share from Kirana from a 2-year perspective? What's your thought on that?

So Abneesh, see, e-commerce as a business was -- we were just nurturing the business till 18 months back. So it was always how do we get consumers to come on e-commerce. But fortunately, the entire COVID accelerated e-commerce space very fast. So our gross margins used to be same what we used to give it to modern trade channels. And same, the EBITDA margins would be there. But to bring the consumers there, yes, there were more banner sales and banner cost and all, which were spend on e-commerce. So margins remain the same what we used to have on modern trade. So we haven't -- so e-commerce is not anywhere margin dilutive. It is at the same levels what -- because there are calls which we need to take, we haven't gone and spend overly on e-commerce to get an extra, whatever market share. And we continue to do where we think is a profitable business for us on the same margin lines of modern trade. Second question, whether e-commerce business will come back to modern trade. I guess so, yes, because when consumers -- see, consumers -- today's consumer, the premium customers -- consumers and the urban, they prefer to go to a large format store where they can buy a lot of things, not even only grocery items, but clothes and so many other things which are there. So it is a matter of time. Modern trade will see -- e-commerce will continue and modern trade will -- some consumers from e-commerce may move to modern trade. But both the channels have very less penetration in India and all of them will grow in that manner.

Sure. My last question is on the Kerala market. So unfortunately, Q1 Kerala remained high in terms of COVID cases. And Q2, now half of the cases is happening in Kerala and now 2 days of strict lockdown. So my question is, is the impact still continuing in Q2 because of the Kerala issue? Or for FMCG, things are not really getting impacted so much? And any long-term plans of reducing impact of Kerala because not just COVID, we have come to know that, obviously, operating in Kerala is one of the toughest. We have seen another group completely withdraw from there. Not in FMCG, in some other segments. So what's the thought process on Kerala impact longer term. And even in Q2, are you seeing impact of COVID?

Yes. So Kerala, for us, is our home. We are well known there, and we are much respected as a company in Kerala. Our origins are from Kerala. And for us, so far, it has not impacted while there are things still uncertain. But as of now, as I speak, it has not impacted. So we are, in a way, prepared. But yes, there are -- these are uncertain times, we'll have to see what happens.

[Operator Instructions] We have the next question from the line of Percy Panthaki from IIFL.

Just a question on Ujala Fabric Whitener. Could you give us some idea as to how much below the pre-COVID level this brand is tracking in the quarter gone by?

So Percy, it's almost back to -- very close to the normal what we used to do earlier, marginal decline, and it's more or less back there on Ujala Fabric Whitener. In Crisp & Shine, it is still to come back because Ujala is available all over India, Ujala Fabric Whitener, I mean. While Crisp & Shine is only there in Kerala. So to earlier question of Abneesh, the impact is more there. It's more localized sales there. And we expect as things improve, even Crisp & Shine should be back to normal.

Right. Secondly, you have taken a 5% price increase. In addition to that, you also have about 200 basis points of cost efficiencies or leverage, as you might call them, but we still have a gross margin impact. So in a situation where the input costs do not come down, how do you plan to mitigate this cost impact because if we take another 3% price increase and make it an 8% price increase, that is -- I mean, will that be too high for the customer to absorb in 1 year because we haven't seen other companies take such high price increases?

Yes. Absolutely right, Percy. So if you look at it, 50% of our raw material and packing material, they are linked with directly or indirectly with crude or crude derivatives. And we all know those product prices have gone up by 40% to 50%. Now in a scenario where the prices are on rise, we have to take price increases. But as I said earlier, we have to take it in line with consumers' -- impact on consumer, competitive dynamics and everything. So what we -- in the last 1 month, we have seen some softening of raw material prices, but again, they were back -- they are almost back to the same normal what they have been rising earlier. So if the price increases continue, we will be forced to take price increases. But obviously, it has to be kept in mind with other market dynamics. And we are working on a few other efficiencies, which we can build in, in our manufacturing process and everything. We will hope that some of those things happen. Hopefully, the lockdown scenario, the fear goes out and the supply chains become much more swift and raw material prices soften out. But in case if they don't, all what we have to do is, yes, somewhere increase the prices or take some hit on our margins as well. And hopefully, if our volume increases, volume growth is high, we continue to get efficiencies from our operating system as well.

Sure. But just wanted to understand the gross margin pressure a little bit more in detail. See, we have a very diversified product portfolio, about 4, 5 categories. So in terms of that, we are very comparable to, let's say, other HPC companies like Dabur or HUL, et cetera. And we haven't seen such a big margin impact after a 5% price increase. In fact, most of the companies have taken more like 3%, 4% price increase. And yet, their margin impact is lower than what we have seen on the gross margin level. So just wanted to understand, is this just some timing difference? Or is it just that we are getting impact earlier because we did not have as much inventory as they have? What really explains the difference?

There is nothing to link with the inventory that we have. I think it depends on the products what they have and what we have. I can't comment on their margins and their challenges. But for us, it obviously depends on the mix what we have. In our case, detergents and dish wash is broadly 2/3 of the company. And that's where we have seen the Napa prices going up. And so if the prices are going up in that manner for the product mix, what we have, there is a higher impact. However, if you see, we have been able to take price increases. We also have -- when we take price increases, the LUPs, which are there, the price increases can't be taken on INR 5, INR 10. So therefore, it depends on the LUP share as well. The other thing is it also depends on the competitive dynamics. And the companies which you mentioned and the one what we have as our competition, it depends on a function of that. So food companies are a little different in that manner. And it depends on what type of raw material price increases they have seen in their portfolio.

Sure, sure. And last one, if I might squeeze in. This quarter, we have done an 8% ad spend. Typically, in the past on a full year basis, our ad spend has been in the region of about 6% to 7%. So is this just a quarterly phenomenon where it's sort of higher? Or do you think that even on a full year basis, now your ad spend will be higher than the sort of historic level of 6% to 7%?

So Percy, we call it as a good cost or an investment for our brand. And if we have to grow a good volume growth, we have to invest behind our brand in which we have been lower than the industry average, if that is what it is. So yes, 7% to 8% on a -- see quarterly numbers will change. But on a yearly basis, 7% to 8% is a fair number to assume.

[Operator Instructions] We have the next question from the line of Shantanu Basu from SMIFS Limited.

I have 2 questions. The first question is with respect to your guide to consumer reach. I mean, your e-commerce channels are doing well. I mean, sales through e-commerce channels, but peers of yours had introduced their direct-to-consumer channels. That is their own websites for promoting their own products. So should we see something from your end as well pretty soon? That's my first question. And secondly is -- my second question is with respect to your borrowing. So can you please give me a breakup of your short-term and long-term debt at the end of the quarter as well as your [indiscernible] previous debt? And lastly, what would be your ETR for FY '22 and FY '23?

Yes. So on the direct-to-consumer bit, we are watching what others are doing, and we are seeing how things are picking up there. While I think the companies that you have mentioned, they have all kind of categories for a consumer to cater to. We are not in the food category yet. And for a consumer to actually come there and get home the supplies for a monthly requirement, you need the entire category table to be there. So right now, we will see how things are happening at their levels. For us, right now, e-com is doing well. And if there is any merit in doing that, we will be doing that as well in future.

So you are evaluating it, right?

Yes, we are evaluating.

And Shantanu, to your other 2 questions. One is what's been the gross debt at the stand-alone level, we have INR 50 crores of loan from -- which is a short-term loan at sub-5% interest cost and -- which will -- INR 25 crores is due in this financial year and INR 25 crores is due in the next financial year. But it's at sub-5%, nothing which we need to worry. There are no other working capital limits which we have drawn until now. To your second question on the ETR, it's fair to assume 18-odd percent as the ETR as we continue to be under MAT.

Okay. And what would be your CapEx for FY '22 and FY '23?

So it should be somewhere in the range of around -- it will be more of maintenance CapEx, so anywhere around INR 25 crores to INR 30 crores.

[Operator Instructions] We have the next question from the line of Gaurav Jogani from Axis Capital.

Sanjay, first, many congratulations on the strong growth that you have registered during the quarter. My question is regards to the same that is there a conscious strategy from the company's end to drive volume growth? And if in the bargain, if we are okay to sacrifice some margins as well? I mean, has there been any change in the strategic thinking of the management on the broad basis?

So see, in short term, yes, there is a trade-off when we say, which is in terms of growth over margins. And we will skew more towards growth. We'll continue to invest in our brands which will give us this constant quality growth. Hence, we don't want to expect to tinker around our A&P spend. As I said earlier, we'll continue with that. So to answer very simple, yes, it will be growth over margins in very short term, but the business will have a strong operating model, and we will be back to our pre whatever -- I mean, the margins what we had earlier in the next 2 to 3 quarters.

Sure, sir. That was very helpful. Sir, my second question is with regards to, again, the gross margin bit only here. So while I do understand that the gross margin pressure has been transient and the stuff is that the pricing of the other raw materials have also been an increasing trend. But when do you see this normalization happening within the next 2 to 3 quarters? And also given the fact that as you've already mentioned that we also have a larger share of the LUPs, so anything that you are planning there? Maybe reducing the grammage? Or anything of that sorts that you're planning ahead?

So like I said earlier, yes, there will be a mix of things which will need to be taken. There will be a consolidating supplier, there will be efforts stunt for reduction of packing material. There will be manufacturing efficiencies build in through SKU reductions, raw material substitutions. So a bunch of things which will happen when the environment is so tough. So we'll take care of all of that. And there's a lot of work, which can be done on distribution, logistics. So all of that will be done, including grammages, which needs to be changed if needed. But yes, all of that will not be done at the expense of the volume growth.

Sure, sir. And the last question from my end is that the performance was already more heartening in the fact that the modern trade in the CSD was yet not back towards the entire potential. And still in the Fabric Care space, which is higher selling through the modern trade, we still have Q2 for 1% growth. So what exactly have driven this growth? If you can outline some of the things or initiatives that you have taken, it will be really helpful.

Yes. So as brands have done well, yes, modern trade does contribute in terms of detergents for us. And in fact, if they were all operational, we would have done even much better. For us, right now, what has helped is the e-com and general trade. And we have seen a general revival of all these things, all these brands under Fabric Care compared to last year, and it's on an upward trend. So if you see our fabric, Post Wash also is like more or less coming back on track. And if -- and in spite of certain disturbances and closures at different states and geographies, it has still done, which means there is actually pull in the brand. And we could also launch liquid detergent in the southern market of Tamil Nadu and Kerala, and that's also -- initial response has been good, which means the brands are stronger.

[Operator Instructions] We have the next question from the line of Manoj Menon.

I just only had 1 follow-up, which is, when I take the next 12, 18 months, how does the new product pipeline -- I understand that this is a very sensitive thing to comment about. But any qualitative comments how the NPD pipeline looks from your point of view? The readiness? Which stage of the finalities? No color on the categories, but just a qualitative comment would be helpful.

Yes. So Manoj, thank you for that question. Actually, we'll be a little more -- we'll assess the market and if needed, there is a real differentiation that we can offer is when we will do any sort of launches. And I would actually go by the thought that whatever we have launched, we need to invest behind those brands and make it stand. There's no point in going on launching if you don't intend to spend. So anything that you launch require that kind of investments, which you will see again in A&P expense. So we have to be -- unless we are not that -- unless we are relevant, we as a company don't believe in launching. So we will launch, and there are products in the pipeline, but timing is very, very crucial here. So like you said, we wouldn't want to really say what are the launches. But yes, we are prepared as a company in terms of NPDs. They are there, but everything, we need to see the timing and then launch. So yes, that's -- I hope that answers your question.

Understood. No, no, understood. The context I asked because if I take the last 12, 18 months, we have seen a very clear pattern of Indian companies being a little more, I would say, active versus multinationals, which has continued over actually. So when I talk, let's say, from the next 12 months point of view, mathematically speaking, MNCs might be a little more active. And many MNCs are your straight-head competitors. So I was just trying to form a view on your business in that context.

Yes, yes. We are well prepared. We have a lot of things in the pipeline. Our teams are ready, and they are working on it. But it's essentially the timing and also the environment in what we want to launch, so yes.

[Operator Instructions] We have the next question from the line of Vishal from PhillipCapital.

I just had 2 questions. First with regards to the launch of liquid detergent. I believe the logical extension of launch could have been under Henko, because it's a more urban-oriented brand and it has higher modern [indiscernible]. So the question is why you launched in the Ujala brand? That is the first question. Second is with regards to the -- within the HI segment, what are the mix as of now between coils and liquids? And I think some quarter back, we were on the verge of just running out of the business, just showing the profits on the HI business. So what is the path to profitability out there in the HI segment?

Yes. So maybe I can take the second question first, Vishal. So path to profitability on HI segment is very clear. It's a focus on liquid vaporizer. Even if, I mean, March quarter was a profit -- marginal profit, I would say. And this quarter also, it's a marginal loss of INR 68 lakhs. So very clear focus is on liquid vaporizer, our brand ambassador Rajkummar Rao on Consumer Connect has been very good with fits all machine liquid bottle, which we have launched. We've been all quite hopeful and quite -- I mean, expecting on the profitability to come in, in the next few quarters for us on a consistent basis. Now we are almost there at the breakeven. And it's also a function of how much media spends we are doing because we want to gain market share here. From 8-odd percent, we have increased our market share there in liquid vaporizer also. So we want to build this category or the liquid side of it for as well. And as of now, it's at a breakeven subject to -- if you look at it ex media costs, it's definitely profitable.

And what is the mix as of now for coils and liquids between you?

It used to be 70-30, 70 in coil and 30 in liquids. It's now around 65-35, 65 coils and 35 liquids.

Yes. On the question of why Ujala -- in the name of Ujala that we have launched liquid detergents. While the question that way is right, the thing is, when you say urban market for us, Tamil Nadu and Kerala are markets where the acceptance of liquid detergent as a portfolio is the acceptance among consumers are good and Ujala is our flagship brand, and it has a strong equity. So there, we have launched the brand. And for us, Ujala IDD was doing really well. And hence, we have extended it there because there's a ready consumer waiting for the -- and we are seeing good response, in fact, initially right from the initial days itself. So having said that, yes, Henko is a national brand for now, and we do have plans there as well. So again, like I said some time back, it's a question of timing, and we'll be there soon as well.

And just 1 more follow-up on the Kerala market. We're seeing the breakout of Zika virus in what we call the Kerala market. Although we are not very strong with regards to HI portfolio in Kerala market, but any extraordinary performance that you're seeing in the Kerala market for the HI segment in the past 1, 2 months?

Not really. I mean it's been -- I mean, the brand is well accepted and it's doing as it is. I mean there's no any big change in that -- I mean like that's the...

We have the next question from the line of Shirish Pardeshi from Centrum Capital.

I have 2 questions. Though on the call, there are more questions on Kerala market. I would like to know what is the contribution which has moved from the Kerala market over the last 2 to 3 years and now?

So Kerala market has always been around 15-odd percent. And it continues to be around 15%.

Okay. And when we see that 15%, this is largely -- if I understand, it's a strong market for IDD and Crisp & Shine and Ujala.

Yes. And also Dish Wash, Exo, Pril. It's a home market, as Jyothy said earlier and all the brands are present there. And all the brands have a very good strong presence. We have a very strong distribution there and market share for us are very strong out there. So all in all, all brands are there. It's nothing like one of them is very weak or one of them is strong, but it's a good market to be in.

Okay. And my second question is on the pricing front. Would you be able to quantify what is the current weighted inflation for us? And I do understand we have taken a 5% price change. So there is a follow-up, what intensity of this 5% is gone? I mean is it just happened in the month of July or it's same throughout the quarter?

It's same throughout the quarter, Shirish. So 5% has been affected, and it's been connected on the ground.

Okay. And what is the weighted inflation we have for our basket of products?

So it's at around 10%.

Okay. So you mean to say that the balance which we are still trying to mitigate through the internal cost efficiencies and maybe not then we will be forced to take some price increase?

Yes, correct. So out of 10%, say 5% has been transferred or passed on to consumers. 2%, as you said, efficiencies do get built in when you're doing large volume. So that's been taken care of 7% and 3% is what we have not been able to do in Q1 which is the impact you have seen on the gross margin and which is transferred down to the EBITDA levels also. So as we move along, yes, either the soft -- material prices softening should happen or other measures what do maybe price increases or maybe other efficiencies over the next 2, 3 quarters, it should help us.

[Operator Instructions] We have the next question from the line of [ Selva Muthukumar ], an investor.

First of all, I congratulate the whole team for excellent result. Just I would like to know about do you have any further plan to inorganic acquisitions, especially the segment of -- dish washing segment?

So as you all know, time is a little difficult. We do have plans, and we keep evaluating, but nothing immediately as on our horizon for now.

Okay. What about the present cash?

Well, we have 80% cash for FY '21 as the payout ratio was around 80% -- dividend payout ratio. And so yes, that's the best measure for a business that we've been able to give INR 4 dividend, or consistent increase in the dividend payout ratios. So that's where the cash has been used.

[Operator Instructions] We have the next question from the line of Percy Panthaki from IIFL.

Sir, just wanted to talk on this T-Shine, which you had launched a few quarters ago. What is the progress on that? We haven't heard anything material on that in the last couple of quarters.

Yes. T-Shine is only in Kerala right now. And while we are talking that did fairly well. There are some few things which we need to do even more for the brand to perform and the team is working on it.

Don't you think we are sort of lagging behind schedule on this because the launch happened actually, I think, maybe 2 or 3 years ago? And it's still in 1 state only after 2 to 3 years. So at least versus investor expectations, it has been delayed, I would say.

Yes. So we have taken an objective that unless we achieve a certain market share, we wouldn't want to literally take it to any other geographies. So for us, that has -- that is the main aim to first reach a certain market share and then thereafter do all the learnings from there and then take it one by one as a step, so -- which we have usually followed. Yes.

Secondly, I wanted to understand this Ujala Liquid Detergent pricing and compared to other brands like Surf liquid detergent, et cetera, how does the pricing sort of work out?

So Ujala IDD, the strategy that we follow is when compared to competition, we are a bit premium to the competition in that segment, so which we have followed that for the powder and for the liquid as well. So for an 800 ml, it's INR 110.

Okay. Okay. So when you say it is premium to competition in this case, what is the competition that you are benchmarking yourself against?

So in Tamil Nadu, it is Rin. And then in Kerala, it is Sunlight.

What is the -- Rin liquid detergent is what you're saying it's at a premium?

Right.

Ladies and gentlemen, that was the last question, and we will now close the question queue. I would like to hand the floor back to Mr. Manoj Menon for closing comments. Please go ahead, sir.

Thanks, Jyothy management, investors, the analyst community, my friends, to be there on the call today. It's our pleasure again to host the Jyothy Labs' call today. Any further questions which you may have, we want to address that to Mr. Sanjay Agarwal, CFO of Jyothy Labs. His contact details are there in the last slide in the presentation. And for any research views addressing to the buy side, please reach out to ISEC. Thank you so much. Have a good evening.

Thank you, everyone.

Ladies and gentlemen, on behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.