Jyothy Labs Limited ($532926)

Ladies and gentlemen, good day, and welcome to the Jyothy Labs Q4 FY '26 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. Ashutosh sir from ICICI Securities. Thank you, and over to you, sir. .

Thank you, [indiscernible]. Hello, and good afternoon, everyone present on the call. I, on behalf of ICICI Securities, welcome you on Jyothy Lab's Q4 FY '26 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, Chair Person 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 FY '26 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. FY '26 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 remain 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, which was declined by 1.3% in value, despite 6% volume growth due to intense competition, price cuts and higher grammage across the market. Personal Care recovered well with the Margo franchise growing by 5% in value and 1.6% in volumes. We expect FY '27 to be a stronger year for this 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 INR 25 crores last year to about INR 5 crores 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&P. 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, and 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 is far and some get impacted in the coming quarters. That said, demand conditions through most of the Q4 remained stable, and we saw a gradual improvement in the consumption, especially in urban markets. Fabric [indiscernible] 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 MoreLight performed well. [indiscernible] saw a 5% volume growth but value growth remained flat. This was largely due to price reductions, grammage increases and promotional losses. 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 BioEnzyme based dishwash formats -- across formats. Personal Care saw a strong recovery. The segment grew by 20% in value and volume in Q4. The impact of GST-related disruption 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 refresh [indiscernible] Margo Originals. This will help improve visibility and support future growth. Household insecticides grew by about 3% in value, while coils continued to decline, growth in liquids vaporizer more than offset this. The mix continues to improve with LV now about 65% of the portfolio compared to 50% last year. This is the moving -- this is moving the segment closer to profitability. Channel trends remain consistent, modern trade, e-commerce and quick commerce continues 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 INR 717 crores, up 7.7% year-on-year. Gross margin was at 45.2%, down about 400 basis points, driven by input cost situation and lower realizations. 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 30 basis points year-on-year. For full year 2026, revenue stood at INR 2,944 crores, 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 INR 333 crores. Net working capital improved to 15 days, a reduction of 4 days. We remain debt free with a strong cash balance of INR 1,000 crores. The Board has recommended a final dividend of INR 3.5 per share for FY '26. 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 FY '27. 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 spend. 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 FY '27. Our focus remains on scaling recently launched NPDs improving general trade productivity and sustaining volume growth amidst price hikes, while maintaining brand investment in a calibrated manner to support medium-term growth. We remain cautiously optimistic about FY '27 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.

[Operator Instructions] First question is from the line of Vishal Gutka from ASK Investment Management. .

Congrats on a decent set of numbers. The question on my side. First, on the Fabric care, excellent numbers on the volume trend around 18% only growth. And I think once in lifetime opportunity radars to converge on power [indiscernible] What more can be done for that the graphs market share in the liquid detergent segment? I understand you've doubled what you call the business size and see Especially on a lower base. . What more can be done from year onwards? I think a couple of products we'll launch, Ujala conditioner [indiscernible] conditioner that we launched. I just wanted more impact from on that. . Secondly, second question on the Dishwashing segment. Due to competitive pressures, I think we will increase the grammage from the third quarter onwards. margins have collapsed out over year from '18, the margins are down to around 10% for the quarter. So what actions can we take for that, the margin gradually because I understand there are [indiscernible] regards to competition the inflation front One of the actions that you've taken is launch launch or maybe exit, if you can elaborate a bit. What is the game plan because since you already have piled in the basket. So how do you plan to scale up both the brands? Third question is on the HI Yes. Third question on the HI piece. Since you have turned profitable on HI during this quarter, what is the long-term growth path and less profitability path for the HI piece year onwards? And last question, madam, is on the cash base that we have of approximately INR 1,000 crores that we are holding. I think we've been, I think, scouting for acquisition for a while. What is the hindrance or what is what we call prevailing [indiscernible]

So Fabric Care is the first question that you asked. Liquid detergent for us has done really well. It is also to note that we -- 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. So that -- and we have grown healthy. So the thing is that we've been investing on the brands, and that has helped us yield that result. And it's not just on detergent, liquid detergents. It's across the fabric are portfolio also. Our Young and Fresh 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. So if you see fabric care across, we have done well. And very happy to see the double-digit growth also on that. And 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. So 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 reductions, the increases have happened and the price reductions have happened. So if you see, compared to last year versus this year, that has been the the trend, but we are happy to say that we have maintained the market share, and we are growing, in fact, in many markets. So that's good. And for some time, it will remain, especially because of the West Asia prices that will see -- that will be there for some time. But we are doing well in the [indiscernible] no concern there. On the HI .

Madam, on the [indiscernible], if you can elaborate what is the game plan because it -- Already dishwashing brand is already there. And now we introduced exo liquid out over there. Just wondered what thoughts how what you plan to fill a bit [indiscernible]. .

Yes. So exo is -- exo liquid is quite differentiated compared to Pril. Pril is at a premium and Exo will be in direct competition with the market leader. And we have bioenzymes included in the formulation. It makes the washing process easier. So that is one that is the differentiator. Our focus is also to grow because you see the dishwash liquid segment also growing. So across if you say across formats, the liquid segments are growing. And we want to capture it in every possible way. So for Exo bar user, if you see, there are no much -- exo not being there in liquid, but the bigger gap rather. So for any Exo bar users to upgrade it was high time to launch Exo liquids. So that is one. Exo liquid is antibacterial and it has bioenzymes but it is more on decreasing and on premium liquid segment. So that is a [indiscernible]. And we wish to see that both the brands grow, we'll be investing on both the brands, yes. .

On HI, you have a specific question on the profitability and long-term plan. So as you have stated some 3, 4 quarters before -- we are working on a plan to turn this category profitable. And the plant has started delivering some results. In terms of our focus, we have been focusing more on liquid vaporizer, and we have taken some aggressive price increases in oil segment that, of course, meant some decline in volumes and value in oil, but that has been more than offset by liquidation. . Our entry Maxo [indiscernible] is also -- is a profitable product and is doing reasonably well, although it's too early to comment because there are only a couple of quarters, the product is available. And we -- in quarter 4, if you see the volume growth has been in high deals for the full year also, if you see, we are almost touching double digits. So the strategy seems to be playing out well. And we had indicated that by the end of FY '27, this category will be profitable, but it seems that the -- 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 the cash balance of INR 1,000 crores, yes, you are right, and we have been scouting for right assets. And very aggressively, we are looking for right asset. But as we have mentioned earlier, we are going to pick up the asset, which actually adds to the overall shareholders' value. And we are in active dialogues with a couple of them. Let's see you know how it pans out. And at appropriate time, we will let the street know about our acquisition decision. Thank you. .

Last question on the margins and overall margins and are highlighted uncertainty as a lot of things -- Like maam, if you can go to provide a guidance Can we assume a margin band of [indiscernible] second. That's the broader margin mandate targeted .

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 metal prices are behaving [indiscernible] is bearing -- we are also taking price increases. All these factors put together, there is extremely high volatility at -- at this stage, we will be constrained to give any guidance on margin front. Maybe once the external environment settles down a little bit, hopefully, it should in a couple of quarters' time, then we'll be able to guide the street on our margin target for FY '27.

The next question is from the line of Rushabh Shah Buglerock PMS.

Just to continue on the previous participant question. Fabric care, as you know, it's clearly make-or-break segment for the company. So how typically is the pricing in the detergent category versus source tied. Are we at a premium or a discount? And also I have read some of the prices of the liquid detergent has collapsed because of the new players who have entered the market. So how is [indiscernible] position out here? And what steps are we taking to defend the market share in the fabric care segment? And the same question would be valid for the dishwashing segment as well. .

Fabric Care segment, all of our brands that are operating, it is not just Henko. We have various brands at different segments and all our priced an apart to competition. In fact, in some markets, we are at premium as well. So that said, I hope that answers your question there. And liquid detergents, yes, it has been competitive. The intensity was there some local players as well. But as we go along, consumers also see their big qualities, there are many brands, especially at the low 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 where -- which brand to be chosen. And there, I think if it were to be bad, this thing then people would have chosen only locals over branded players. But the thing that all the organized players are growing handsomely in this segment, which also means that slowly that trend will change going forward. Consumers will definitely look for quality than just a [indiscernible]. So that's what I believe in. The same goes for Dishwash as well. .

Okay. Can you please talk about brand differentiation compared to the competition. So we then what -- what we offer is differentiated? Is it what competition is offering. So my question what -- like when you say differentiated products, what exactly are we talking about? Is it only the effectiveness of the product or is it the branding differentiation? What are we talking about? .

Yes, it's a positioning, Rushabh. I don't think I can sit and explain each brand because there are many in the Fabric Care segment, each one stands for different...

This question is just related to the fabric are. Is the overall lapse and .

Certainly. What I'm saying is each brand has a different positioning. So it's -- what the brand speaks is what the brand delivers. That is where it is. So we are differentiated. Now I cannot sit and explain on the call what each brand stands for. If you see it -- but whatever we speak on whatever we -- the spend that we do, the communication that reaches the consumers, they are differentiated in terms of -- compared to competition, right? And at pricing, we are at similar pricing to that of competition. So hence, there is -- we've been that way since quite some time, and we have made our mark. So that's what I can explain right now. .

And my second question is, I suppose you do an inorganic acquisition, what other things which you will investigate in terms of the work culture of the company, the profile of the customers et cetera, and many other things, to what things will investigate in your company? .

So there is -- the reason why we have not been able to announce any acquisitions so far is the robust screening process. And we have a very robust and tight process through which we look at any potential opportunity. And there are various aspects to. It is not just the cultural alignment. Of course, this is an important element, but there are other factors also channel, the category, the price point, the consumer segment, the market, the presence on organized trade. All these factors will take into consideration while taking a call on a particular opportunity. .

Last question is what -- we have seen that certain categories which reach, let's say, penetration of 14%, 15% and then those slow burn rate starts when the incremental penetration becomes difficult. And fight with the competition. So what I wanted to know what is the thought process on rather or rather what are the strategies lined on gaining incremental share in our categories alongside fighting with the competition. .

The end of the day, you'll have to fight the competition Ruhabh, there's no escape from there. So the categories that we are present is very competitive in nature. And I've explained in my previous thing that we are differentiated. We'll keep spending on the bench, and our quality will speak for itself, right? So those are the parameters where you can fight or -- and if your consumer chooses you, it's a win for you. So that's all what I can explain to you on the call here. .

The next question is from the line of Naveen from [indiscernible]. .

I hope I am audible. .

Yes, you are. .

Yes. So I just wanted to understand on small thing about the margins. It's not of a clarification or anything else. So I just want to understand if some lower price inventory has helped us cushion the margin impact this quarter? Or if it's been like exhausted all that low cash inventory and you've taken a hard to buy inventory. These activated prices as of or season to maybe just 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. So not a material impact as far as the lower priced inventory issue is concerned. .

The next question is from the line of Yogesh Mittal, Individual Investor.

So I wanted to ask about the divisions that we have in the Fabric care that this was [indiscernible]. We have -- are individual the business heads for them? Or how do you -- be managed because they target to a different kind of the customer needs? I just wanted to understand this part.

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

So the business had -- do we have the business head for each of the divisions or the segment, as we call them

No, not asa 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. Yes. .

Right. right. And just one thing I wanted to ask something more, if I can squeeze in. For the Personal Care, do we intend to go in the [indiscernible] segment as well Because soap and this as such in case like some duty segments or products which you are thinking of coming in.

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

The next question is from the line of Sumil [indiscernible] .

My first question was with regard to the Dishwash segment. Just asking objective. Have you seen the competition become less intense than you see in the month of [indiscernible] sensibly in terms of pricing and volumes have [indiscernible] that you can give.

Sorry to interrupt, sir. The voice is muffled. May I request you to use a headset? .

Sure. I am asking the question. Is it better now? .

Yes, sir. It's better now. You can continue. .

Yes. Yes. I was asking, have you seen competition become less intense in the dishwash segment in terms of pricing of Grammage. You can share there? .

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

Got it. My 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 lower by 1 percentage point. Wanted to understand for next year, do we see the convergence directional, 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 [indiscernible] 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. Sure. That is good not for me. My last question is with regard to the retail footprint of Jyothy as a brand. I just wanted to, I think between last year and this year, just picking up data from your debt you seem to have added a [indiscernible] outlets overall. Just wanted to understand if there is broader guidance on states, where your footprint is less, reasons your footprint as well and you will intend to have a plan of how many retail outlets we need to add to expand and pull the gaps in those areas. .

So we've been adding almost INR 50,000 to INR 1 lakh of retail outlets every year, and that is what will continue. And that is across the country. There is no particular geography or things like that. So it will be in across GP is in outlets. .

The next question is from the line of Aditya Sonam from CLSA. .

Can you give us a sense on market share, how you [indiscernible] and liquid soaps for. If any sort of sense you can give -- that would be very useful. . In differently, how are we the . [indiscernible]

Your voice is breaking. just come a little bit closer Yes. .

Yes. On liquid detergents, we are seeing a huge amount of competition. How are we seeing -- how are we Grow in this competitive environment? .

So we do not give the detailed brand-wise or category market share data. But on an overall basis, we have protected our market share or improved it across various categories, is always continue. And in liquid detergent also specifically, we have done really well. Our market shares have improved. .

Understand. And any sense on competitive positioning of the products? I mean, how -- in terms of price points or where you're seeing the most demand at what size point. Any sense will be that useful. .

So we have different segments, Aditya, that is you have your premium, you have your math, you have your mid. And we have priced at par with competition. So -- and like Pawan said, we have either retained the market share or have improved that across trends. .

I understand. No, no, I know about the different price point. What I wanted to understand also a little bit more is you indicated that we have seen a shift from sort of powder to liquid. Is this thing also driven by being sort of more aggressive on pricing of liquids. One of the things I'm seeing in my checks is that price per use on liquids has now dropped below powder for [indiscernible] brand. So would that be sort of a strategic choice? .

Yes. See, if you see a few years back when liquids were introduced in the country. At that time, it was a premium to powders. It is just to induce trial that players have to make it more affordable to have more to see the benefits of liquid that such competitive pricing has been introduced in the market, and that has continued for some time. Maybe after a couple of years, things may see a different picture in that segment. But otherwise, for now, yes, it is very competitive. .

I understand. Very clear.

The next question is from the line of Akash Shah from [indiscernible]

Just wanted to ask, sir, how much has the price increase being taken in dishwash and detergent segment? And 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 the inflation? .

Thank you, Akash. So 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 1 to a large extent and a full impact, which should be visible quarter 2 onwards. . Second, on the inflation side, our large part of our portfolio is impacted with crude or good derivative inflation. So there, the impact is higher. And also in packing materials, we have seen in the last couple of months, the proving the DPP going the prices going up significantly. So on packing metal side also, there is an inflation impact overall pricing increase first action we have taken and if required, we will take us going forward, depending upon how inflation success.

And 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, it's -- I cannot give that number now, but 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 or ambition, we have to keep all the factors in mind while taking any pricing decisions. So we are taking calibrated steps we'll continue to do so, right. .

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

At the company level, I'm saying across various brand categories, SKUs, some mix, I'm talking about the portfolio levels. .

And sir, 2 bookkeeping questions. One is, sir, how much will the tax rate for us for FY '27?

It will be -- we will be going for 115BAA. So rate should be around 25% to 26%. It should be hovering between 25% to 26%. .

Right. And sir, CapEx for '27, will it be -- I mean similar to previous year or a bit higher?

Similar. It will be in similar range, yes. .

The next question is from the line of Harit Kapoor from Investec. .

Just had a few questions. One was on the pricing that you just mentioned. So while you did give the weighted average number. I just wanted to understand that is the entire pricing in fabric in Dishwash or you also have taken up prices.

No. As I said, Harit, this is across all the segment categories. So the blended increase would be close to 4% -- little over 4%.

I get that, I just wanted to check whether there have been increases in stopes the question .

Yes, we have initiated. As I said, in the month of March, we have initiated the impact would be visible in quarter 1, including Margo .

Okay. And 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, for the second half of this year. Just wanted to understand what level of mix you've been able to kind of achieve these breakeven numbers, In terms of [indiscernible] .

No, what I'm saying is it is too early to draw any conclusion based on 1 or 2 quarters' number. While the LV is share in the total HI has improved, if you look at last 4 to 5, 6 quarters, it has improved slowly but gradually. Now it is at 55% and [indiscernible]-- and also when I say [indiscernible], the new launches, for example, Aerosol and racket cetera, and bunching together because the profitability is superior compared to oil. So these products are doing well. And hence, the ratio is stated in favor of LV and others, whereas oil dependence is coming down. .

Third question was really on the price increases, which have been taken by yourselves in the market. Do you see -- have these been broadly in line across most that most players would have taken similar levels of price increase according to your -- in your key categories? Is that what you're witnessing? Or there is 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 are right. Your assessment is right. It is in line. .

Okay. Got it. Got it. And last bit was on the Fabric Care bit, exceptionally strong volume growth numbers, in fact, not even quarter 4, even quarter 3 numbers are very good. while you've mentioned liquids is like 2x, but I remember it being like a low single-digit share of your mix, if I'm not wrong, correct me if I'm wrong, please. But -- so 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 a couple of categories like either premium urgent or mask detergents, something doing much better than the other. Some color on that would be very helpful. .

No, I understand the -- from where you are coming, Harit. But overall, the [indiscernible] category has been doing well for us, both in [indiscernible] as well as in foot wash, liquid bar soaps, our premium -- our flagship product, Ujala Supreme fabric right now. 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. .

Good. And sorry, last One last question is that any sense of -- apart from premiumization because there's also a lot of volume growth. So apart and premiumization in terms of adoption, penetration, usage, overall category growth, have you also seen that lift up in the last 2 quarters, like not for you overall, but just overall category growth, and you see that pick up as well because -- you've definitely been gaining, but would you see category growth also in -- have been really -- you're adding to that tailwind? .

So that category is definitely growing compared to powders, liquids are growing. That is what I can say. And that has been on a similar thing through the year this year, last year also. So -- but yes, we've done well. The powders have started diminishing. That is the main thing. So Yes. .

The next question is from the line of Amit Purohit from Elara

Sir, just trying to understand, I mean, on the pricing side, you highlighted the 4% price increase at the portfolio level. If I look at Q4 versus Q3, the price reduction of the difference between volume and value has further gone by 1% or so. Is that largely to do with some of the mix or some schemes that you might be running? Is that the reason .

It's a combination of a lot of factors, not just the schemes, your grammages or quantity, the MRP cuts. It's a combination of a lot of factors across different segments and categories. .

And then you have taken price increase of 4%. Have you released the schemes as well? Is the combination of 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, a large portion of it, which should be visible in quarter 1 and quarter 2 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%. .

And sir, on the -- just to -- again, on the margin thing, while I understand it's a volatile scenario. But when I look at, I mean, current numbers, and we would be carrying some bit of an inventory which will be a whole stock inventory, which would -- as we indicated not much of benefits would have come -- but if I think from 2 quarters down the line, are we in a scenario where the inflation concern is only reason we do have taken price increase. So could there be a scenario in the near term that this exit margin of Q4 could be slightly lower in the near term? Is that directionally if you can help only be much better for us to understand. While I take your point on the volatility scenario, but just modulate 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. So quarter definitely there is some pressure on margins. But it's highly linked to what happens on the crude and crude derivative prices. which would have a bearing on our pricing actions. So for the current quarter, there will be some pressure on margins. .

Sure. And lastly, sir, is there any possibility 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. I mean this quarter saw a significant fall in the EBIT margin. So there is no otherwise stable change, which would probably result in a slightly lower margin profile from here on 1 to the extent, excluding the crude scenario, which we are seeing right now. .

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

And 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 are seeing on the ground some market share gains as from smaller players, especially on the liquids apricot powder, if you can touch upon that and our ability to force it slightly better. That's all these points volatility. .

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

The next question is from the line of Sudesh Deshmuskh [indiscernible] Capital. .

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. So why in this quarter, gross margin has gotten affected by 400 basis points? .

Good question, Perse, -- there are 2 reasons for this. One is, of course, some bit of inflation did with us in quarter 4 -- but on the pricing side, lower overall lower sales realization has also impacted the margin. As you know, we have a typical 2 to 3 months of lag between the the cost increases on the input side and the price action that we take on the sales side. So that has impacted. The corrective action, the sale price increase decision was taken towards the end of the quarter. while the lowering of sales -- average sales realization was happening through the quarter. And hence, you see some impact in Gross margin in this quarter. .

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

So this extra damage is something driven by competitive pressure? Or is it something that like you have done even though the competition has not done the same thing? .

No, no. So it is a competitive reaction. Also, as we speak, so last year versus this year, there's a huge price reduction also that has happened. If you see quarter-on-quarter, last year's price versus there's a huge difference. So even if we have grown by volume, the pricing action and the granites, these put together, along with your other inflated raw materials, all of this together all converged in this quarter. So that is why you see that. .

Okay. Because just trying to understand this a little bit in detail. One is, of course, there is some -- in some categories, there is just GST-led grammage and lower price, but it defense did not have that. So -- andif I'm also looking at HUL results, they have not seen a significant kind of margin pressure. So just wanted to sort of put across these data points and see what is happening that -- I mean see where I'm is even if I see the last crude price cycle a few years ago, our margins had come down from 16%, 17% to 10%, 11%. And EPS, I think on a full year basis, not just for 1 quarter, had fallen approximately 50% or something like that. So just wanted to understand why -- I mean, why this kind of impact on bottom line happens to us much more than other companies even adjusted for the product portfolio? Like, for example, instead of looking at HI overall as a company, if I look at only the home care, in the past cycles, we do not see such a big impact. But if we look at other FMCG companies, we do not see such a big impact. So 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. But 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 derivatives. And also, if we look at the key raw material [indiscernible], 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 HDP 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. So all these factors, plus the average lower average serialization has affected the margins. And as I indicated, quarter 1 is also going to be some pressure, while calibrated pricing action will be taken, but it is all linked to our input prices behave going forward. .

Yes. 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, so hence, you don't see as much. Apart from that, the coil as a segment is also margin related. So that is an addition to us, but we have performed very well on liquid. So while we are trying to correct that segment as well, as you see, -- so these are the factors which impact us more than for others. .

Got it. Got it. But why not then take a lower price increase, 4% seems very low.

We are 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. [indiscernible] So we have to strike a balance between the 2. I'm not saying oneversus the other. It will be a combination of both. But again, it will 100% input price increase, as you know, cannot be passed on to the market. .

That was the last question for the day. I now hand the conference over to Mr. Pawan sir for closing remarks. Please go ahead. Thank you. .

Thank you. Thank you so much. We really appreciate your interest -- your continued interest in Jyothy Labs Limited. Thank you so much. Have a pleasant evening. Thank you. .

On behalf of Jyothy Labs Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. .