DEAR SHAREHOLDERS,

It pleases me to say that we have finished yet another year climbing a few more steps towards growth. Now we present to you the significant shareholder value that was created by the strong performance of our team.

The market is never without challenges, but we have continued on a growth trajectory, reinforcing core strengths, which enabled us to ride out the macroeconomic uncertainties. I can tell you with complete confidence - confidence that is based on the immense power of the whole Jyothy Laboratories team – that we are poised for larger tasks.

We shall do everything to retain this winning edge, and the national policy environment in the country has become our tailwind. This environment is extremely encouraging for businesses like your Company. We have always been in India, for India, and we are proud of ‘Make in India’. The initiative, launched in late 2014, gained momentum in 2015, the year under review in this report. We have walked this path from our inception. The fundamental principle of Jyothy Laboratories is making life better for the people of this country by manufacturing world-class products using local skills. We believe that indigenous skill should be much better than what is available abroad.

At Jyothy Laboratories, we want to – and we do – contribute something to make the nation proud. ‘Make in India’ should spread across the country; we go to the rural areas and create jobs. We believe that the manufacturing sector can reduce the excessive dependence on agriculture and bring more people into the bracket of prosperity.

Our corporate social responsibility initiatives are driven by the same principle of making Indians proud. When we present underprivileged widows or adivasis with the gift of housing, they get more than a shelter; they develop a greater degree of self-esteem, as they are now able to step out from a place they can call their own.

Business, for us, is so much more than numbers. It has a higher purpose, that of giving back to society. Our people connect helps us to identify the most relevant areas of corporate social responsibility. CSR is very important to us, and we choose our programmes to make a real impact, working in a focussed manner. We have put all our money in one district in Kerala, where the company started. In the Thrissur district, we have installed 350 good toilets in all the government schools for girls. Then we built homes for people who were displaced by a dam project but were given land by the government. We also gave pukka houses to 27 widows of fishermen.

OFFERING PRODUCTS DIFFERENTLY

The keystone for us is differentiation – every one of our products has to have a USP, every single product must be different and better than other products in its class. With each new launch, we have targeted a particular segment, offering a solution that Jyothy Laboratories thought of first.

The consumers always deserve better; it is possible to always give them something better. Society grows by always wanting more.

In keeping with this, the technology used in our manufacturing is of the highest quality. Our plants are highly automated for the purpose of making the output as perfect as possible. Simultaneously, we invest in manpower and strengthen the people connect, so that we can think like a consumer and imagine what they want. Consumers have desires, but are not always able to articulate them. It is up to us to draw out that desire, and create an inspired offering.

As a business, our success is based on the insight gained from reading the consumer’s mind; crystallising that into a viable product idea; and then developing that product to make a meaningful impact for the consumer. So, with pride, I can share that the three pillars of your Company are: insights, ideas and impact.

TRANSLATING OUR EFFORTS INTO NUMBERS

The strategy of launching unique products, and reinventing brands with newer advantages, has led us to an overall 9.3 per cent growth during the year under review. The operating EBIDTA jumped to 237.6 crore, a sharp increase of 24 per cent over the previous year. Each of our six Powerbrands gained market share and the overall Powerbrand sales increased 10.3 per cent. Cash profit stood at 206.9 crore, an increase of 13.4 per cent over the previous year.

Our working capital cycle, which was down to 17 days in FY14-15 from 27 days in FY13-14, has now come down to 14 days in FY15-16. Based on our positive results, the Board has recommended a dividend of 500 per cent, or 5 per share, inclusive of the interim dividend of 400 per cent declared and paid earlier.

The external challenges during the year under review, mainly the subdued rural demand caused by low rainfall, were somewhat mitigated by the drop in oil prices, which reduced our input costs. Automation of our manufacturing units cut operational expenses. The marketing strategy continued to centre around people power. Our brand ambassadors are celebrities, but our real connect with consumers and sales outlets comes from a proprietary system of building onthe- ground relationships. This is a very cost-effective way to grow. The strategy of developing people and developing technology further streamlined our operations. When an organisation has all the right systems and a team with its heart and brain in place, it can focus on delivering the greatest value to the customers and investors.

GOING FORWARD

The strategy of your Company is to consolidate and grow by presenting products and experiences that capture the imagination of a new generation.

We see every year as an opportunity rather than a challenge; there is always room to grow, room to become more sustainable, room for giving more value for money. In the years when external factors make business easy, we do not take it easy – we set the bar still higher and create something unique.

This journey of three decades is that of the entire Jyothy Laboratories family, as we have earned the loyalty of both employees and consumers. Our consistently positive financial results and solid reputation are the outcome of the efforts made by everyone at every level.

We thank all the people within and outside the organisation who have placed their faith in Jyothy Laboratories – our highly energised team; our supply chain stakeholders; and our valued shareholders, who always give us such excellent support.

Our ceaseless endeavour has been to build trust and value, and we shall continue doing so, giving all we can to the dream of making India a better place on the globe.

M.P. Ramachandran

Chairman & Managing Director